Business Meals Provided by Restaurants Fully Deductible in 2021 and 2022

In general, the ordinary and necessary food and beverage expenses of operating your business are tax deductible.  However, the deduction for business meals has been limited to 50% of the otherwise allowable expense.

Section 210 of the Consolidated Appropriations Act adds an exception to the 50% limit making food and beverages provided by a restaurant 100% deductible if paid or incurred in calendar years 2021 or 2022.

It’s important to note that the other existing requirements continue to apply such as:

• The food and beverages can’t be lavish or extravagant under the circumstances.
• You or one of your employees must be present when the food or beverages are served.
• The food or beverage must be provided to you or to a business associate such as a prospective customer, client, supplier, employee, agent, partner or professional adviser with whom you reasonably expect to engage or deal with in your business.

We recommend that food and beverage expenses not provided by a restaurant in 2021 and 2022 be segregated from those provided by a restaurant in your accounting records to assist with the tax preparation process for these tax years.