For A Limited Time: Businesses Can Write Off 100 Percent of Meal Expenses

From the first day of this year to the very last night of 2021, business owners will be able to deduct 100 percent of all food and beverage costs they incur while entertaining. Previously, the deduction for wining and dining clients was limited to 50 percent, but due to COVID-19, relief measures were introduced to help businesses as well as the economy.

The temporary increase, known as Notice 2021-25, was part of the Taxpayer Certainty and Disaster Relief Act of 2020, provided by the Treasury Department and the Internal Revenue Service (IRS). 

IRS Section 274, “Disallowance of Certain Entertainment, Etc., Expenses” rules remain the same, only the amount of the percentage was changed for this calendar year. 

The IRS tax code considers restaurants as businesses that prepare and sell food or beverages to retail customers for immediate on- or off-premise consumption. Establishments that sell prepackaged food and beverages such as grocery, convenience and liquor stores are not considered restaurants under this code.

The tax code also stipulates that the business owner or an employee must be present and that under the circumstances, the expense is not lavish or extravagant.

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