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Business Meals for the 2020 Season

Details on 100% business-meal deductions (from the February issue of "The General Ledger" and the AIPB)

The renewal after many years of 100% deductions for business meals is for 2021 and 2022—but not 2020. It is part of the Taxpayer Certainty and Disaster Tax Relief Act included in the Consolidated Appropriations Act. The IRS will have to issue guidance on the amount of the deduction.

The 100% deduction applies to “food or beverages provided by a restaurant” (entertainment expenses remain nondeductible).

For now, “restaurant” seems to be a key word.

The Senate Finance Committee said the deduction applies to expenses for in-restaurant dining as well as take-out and delivered meals from restaurants. This seems to indicate 100% deductions for meals catered by a restaurant on the business’s premises or other venue the business selects.

Disallowed? But the provision appears to disallow the 100% deduction for food and beverages provided by entities other than full-time restaurants, such as convention or meeting facilities. Also unclear: whether a 100% deduction is allowed for beverages purchased at a bar, coffee shop or other entity with little or no food service that might not be considered a restaurant. Still to be clarified: hotel room service or banquet service meals and beverages.

Still 50% deductible? Those business meal expenses that do not qualify for the 100% deduction should qualify for a 50% deduction under the pre-existing rules.

Questions? Contact us for a consultation - we're here to help!

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