By: Matthew Rak, Esq.
On April 8, 2021, the IRS issued Notice 2021-25 providing guidance on the temporary allowance of a 100% deduction for food and beverages provided by a restaurant. Historically, the business deduction for meals have been limited to 50% of the expenditure (with few exceptions, entertainment was made non-deductible following the Tax Cuts and Jobs Act).
While meals remained 50% deductible following the Tax Cuts and Jobs Act, other restrictions applied including: that the expense is not lavish or extravagant under the circumstances, that the meeting could reasonably be anticipated to lead to business, and that the taxpayer be present at the furnishing of the food and beverages.
The Consolidated Appropriations Act (“CAA”) temporarily increased the deduction for meals provided by a restaurant to 100% rather than 50% so long as the expense was both paid and incurred in calendar year 2021 through 2022 for food or beverages from a restaurant. (CAA Division EE, Section 210).
While restaurant meals are 100% deductible, taxpayers should be aware that certain non-business development food expenses remain subject to the 50% limitation, such as office snacks and coffee and client food or beverages that are not purchased from a restaurant.
For more information on this business deduction or any other related questions, please contact Matthew Rak.
Matthew Rak is a Partner with Leech Tishman and a member of the Estates & Trusts Practice Group. He is also a member of the Corporate Practice Group, where he leads the Nonprofits and Tax-Exempt Organizations Team. Matt is based in the Pittsburgh office and can be reached at 412.261.1600 or email@example.com.
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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in business restructuring & insolvency, corporate matters, employment & labor, estates & trusts, intellectual property, litigation & alternative dispute resolution, and real estate. In addition, the firm offers a wide range of legal services to clients in the aviation & aerospace, cannabis, construction, energy & natural resources, healthcare, and hospitality industries. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in Chicago, Los Angeles, New York, Philadelphia, Sarasota and Wilmington, DE.