50% versus 100% Meals and Entertainment :: Wamhoff Financial & Accounting


50% versus 100% Meals and Entertainment

As you may know there are some meals and entertainments that are not 100% deductible. Normally, the meals and entertainment are only 50% deductible. This means that only 50% of these expense are allowed on your tax return. However, there are some meals and entertainment that are 100% deductible.

The following are the types of deduction can be 100% of meals and entertainment:

• Meals and entertainment expenses for a company or holiday party.
• Complementary food or beverages provided to the customers.
• Meals that are provided by the business for at least half of the employees for working after hours, weekends or holidays.
• Sporting, social, theater, etc. tickets are usually considered entertainment.
• Charitable event meals are 100% if all proceeds from the event go to a 501 ( c ) 3 Charity.

You must be able to prove the 4-P’s to take the expense:

• Price- the amount of the expense
• Place-the time, dates and place of the expense
• Purpose- the reason for the business discussion
• People-The identification of the clients who participated.

Examples of Nondeductible items:

• Unrelated business with clients or customers.
• Ticket price for sporting events that you do not attend.
• Membership dues for athletic clubs.
• Unreasonably extravagant entertainment for business purpose.

https://ttlc.intuit.com/questions/1900997-what-types-of-meal-and-entertainment-expenses-are-100-deductible-on-a-business-return

https://www.irs.gov/publications/p463/ch02.html