100% Deduction for Meals and Entertainment Expenses in some instances

Under the current tax code, generally meals and entertainment expenses incurred for business reasons is only 50% deductible. However, there are some exceptions to this rule where the meal and entertainment expenses are 100% deductible. Here are some we thought may apply to our clients:

  1. Expenses for recreational or social activities incurred primarily for the benefit of your employees- This includes company parties or picnics.
  2. Business meetings- Meals for in-office employee training are deductible, as well as meals for shareholder or director meetings. If the meals are to reward employees for service, the meals are 50% deductible.
  3. On premises food and beverages- This exception is for food provided in an employee cafeteria.
  4. Expenses for food made available to the general public- This exception covers food and drink made available to customers in the reception room.
  5. De minimis fringe benefit- These expenses are those that would be unreasonable or impractical to track as an employee benefit such as employer provided coffee.

 If you have expenses that fit into one of the five categories above, be sure to split these out when you give us your accounting information so that we take the 100% deduction for the qualifying expenses.

If you have questions related to meal and entertainment expense, please let contact us.

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