Trying to figure out the rules concerning writing off meals and entertainment for your small business is pretty confusing. Some meals qualify for 100% deduction, some 50% deduction and others don’t allow any deductable at all. It depends on the meal, the location and the purpose of the meal.
Here are some basic rules:
Meals While Traveling
If you’re traveling for business, your travel expenses are partially deductible. While you can deduct 100 percent of your lodging and mileage expenses, you can only deduct 50 percent of the meals you purchase.
Meals as a Form of Entertainment
As long as there’s a business connection, meals can be considered a deductible form of entertainment. To write it off, there must be some substantial business discussion before, during, or directly after the meal.
100 Percent Deductible Meals
The IRS allows businesses to fully deduct occasional small snacks and meals that are purchased for the benefit of employees. Doughnuts and coffee purchased for an office meeting are a perfect example. Lunches and dinners brought in to facilitate working through lunch or working late also count. The cost of food and drink involved in hosting a companywide event– like an annual picnic or a summer outing – are also deductible.
The IRS has provided a document detailing the specifics – IRS Publication 463
The following comprehensive chart, provided by Intuit, details these deductions.
| Event | 2017 Expenses | New 2018 Expenses |
| Client Business Meals | 50% deductible if taxpayer is present, and not lavish or extravagant | 50% deductible if business is conducted, taxpayer is present, and not lavish or extravagant |
| Transportation to/from Restaurant for Client Business Meal | 100% deductible | 100% deductible |
| Sporting Event Tickets | 50% Deductible for face value of ticket (anything above face value is non-deductible 50% deductible for skybox expenses to the extent of non-luxury seat ticket face value in such box 100% deductible for charitable sports events Contributions for the right to purchase tickets to an educational institution’s athletic events 80% deductible 50% for transportation to/from and parking at sporting events | No Deduction |
| Club Memberships | No deduction for club dues; however, 50% deduction for expenses incurred at a club organized for business, pleasure, recreation, or other social purposes if related to an active trade or business. | No Deduction |
| Meals Provided for the Convenience of the Employer | 100% deductible provided they are excludable from employees’ gross income as de minimis fringe benefits; otherwise 50% deductible | 50% deductible (nondeductible after 2025) |
| Meals Provided to Employees Occasionally and Overtime Employee Meals | 100% deductible provided they are excludable from employees’ gross income as de minimis fringe benefits | 50% deductible (nondeductible after 2025) |
| Water, Coffee, and Snacks at the Office | 100% deductible provided they are excludable from employees’ gross income as de minimis fringe benefits | 50% deductible (nondeductible after 2025) |
| Meals in Office During Meetings of Employees, Stockholders, Agents, or Directors | 50% deductible | 50% deductible |
| Meals During Business Travel | 50% deductible | 50% deductible |
| Meals at a Seminar or Conference, or at a Business League Event | 50% deductible | 50% deductible |
| Meals included in Charitable Sports Package | 100% deductible | 50% deductible |
| Meals Included as Taxable Compensation to Employee or Independent Contractor | 100% deductible | 100% deductible |
| Meals Expenses Sold to a Client or Customer (or Reimbursed) | 100% deductible | 100% deductible |
| Food Offered to the Public for Free (e.g., at a Seminar) | 100% deductible | 100% deductible |
| Office Holiday Party or Picnic | 100% deductible | 100% deductible |
While we do not prepare taxes; we are able to offer some basic guidelines. As always though; defer to your CPA for specifics and when in doubt – it can be tricky and change from year to year.