For 2021 and 2022 calendar year periods the 50% meals deduction has been increased to 100% when relating to food or beverages purchased through a “restaurant”. Previously the definition of a restaurant was unclear so the IRS has issued guidance.
The Tax Advisor has an article that nicely summarizes the points from IRS Notice 2021-25. The following are the key takeaways:
The 100% meals deduction is available through December 31, 2022. Keep in mind, the IRS still requires that for a business expense to be deductible there must be a business purpose.
If you have questions contact your accountant and follow us on LinkedIn to stay up-to-date on all of our posts.
- A “restaurant” is a business that prepares and sells food/beverages for immediate consumption which may or may not occur on the business’s premises.
- A business that sells prepackaged food or beverages, such as grocery stores, drug stores, convenience stores, vending machines and kiosks are not restaurants. For any of these types of purchases the meals deduction will be limited to 50%.
- An eating facility located on the employer’s premises like a cafeteria does not qualify as a “restaurant”.
The 100% meals deduction is available through December 31, 2022. Keep in mind, the IRS still requires that for a business expense to be deductible there must be a business purpose.
If you have questions contact your accountant and follow us on LinkedIn to stay up-to-date on all of our posts.