Not Your Meals

Today TaxMama hears from Megan who is appalled, “I heard that when deducting expenses for a business lunch (say, you and a client went out for lunch to talk shop), you are only allowed to deduct 50% of the price of the meal. That is, only their portion of the bill as a legitimate tax write-off.

Apparently, the logic is that you shouldn’t be able to write off your own meal as a business expense, only your client’s, since you would have had to eat anyway.

Is this true? Doesn’t seem fair… especially since you may not have gone to such a nice place if it wasn’t a business meeting.”

Dear Megan,

What an interesting perspective!

It has nothing to do with reality. But, it is interesting. I’ve never heard that explanation before.

Congress instituted the 50% limit to total meals deductions for two reasons.

1) It was a way to raise revenues (or at least to limit the drain on revenues) by reducing a tax deduction.

2) Meals and entertainment deductions were clearly being abused. Businesses were exaggerating their costs, often including purely personal or social meals along with the business numbers. (How many times have you seen people get together for dinner and say “Business! OK, now it’s a business meal!” ? Rather than have IRS scrutinize each and every one of hundreds or thousands of receipts, Congress simply cut the deduction in half.

On the other hand, who knows, your logic could be right, but it wasn’t spelled out that way. I do like the way your mind works! Bravo.

And remember, you’ll find answers to questions about deducting meals and all kinds of tax issues, free. Where? Where else? At TaxMama.com

[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
  • Ask TaxMama :: Where taxes are fun and answers are free

File Download (1:38 min / 0.4 MB)

Leave a Reply