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Is irs meals and entertainment a business expense?

TL;DR

Meals and entertainment expenses can be partially deductible as a business expense, but specific conditions apply.

Detailed Answer

Under IRS rules, business meals are generally 50% deductible if they are ordinary, necessary, and directly related to or associated with the active conduct of a trade or business. Entertainment expenses, however, are not deductible. For meals to qualify, the taxpayer or an employee must be present, and the food and beverages must not be lavish or extravagant. For example, meals provided during a business meeting or while traveling for business can be deductible. Entertainment expenses, such as tickets to a sporting event, are not deductible even if business is conducted during the event.

Where to Put It on the Tax Form

Report on Schedule C (Form 1040) under 'Meals and Entertainment' or on the relevant business tax form.

Real World Example

A marketing consultant takes a client out for lunch to discuss a new project. The meal costs $100. The consultant can deduct $50 (50% of the meal cost) as a business expense on their tax return.

Calculation Required

A calculation is required for this deduction.

Calculate 50% of the total meal expenses incurred for business purposes to determine the deductible amount.

Audit Risk & Documentation Tips

To minimize audit risk, keep detailed records including receipts, the business purpose of the meal, and the names of attendees. Document the time, place, and business relationship of the meal to substantiate the deduction.

IRS Reference

IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses

Relevant Industries

Small BusinessFreelancersConsultantsSales Professionals

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 15, 2025

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