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Lev
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Business Meals and Entertainment is taxed at 50%, what about

Customer Question

Business Meals and Entertainment is taxed at 50%, what about business meals when you are traveling away from your tax home...is that 100%?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

LEV :

Hi and welcome to Just Answer!
Not taxable - but deductible - in general, you can deduct only 50% of your business-related meal and entertainment expenses. The same is true when you are deducting meals as part of travel expenses - regardless how you account for meals - based on actual meal expenses or based on per diem rate - only 50% of your business-related meal and entertainment expenses may be deducted.
There are some exemptions from that rule.

LEV :

You can deduct a higher percentage - currently 80% - of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. This rule applies for instance to truck drivers.

LEV :
Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.
1- Employee's reimbursed expenses. If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan.
2- Self-employed.If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met.
  • You have these expenses as an independent contractor.

  • Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform.

  • You provide adequate records of these expenses to your customer or client.

In this case, your client or customer is subject to the 50% limit on the expenses.
LEV :
3- Advertising expenses. You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.
4- Sale of meals or entertainment. You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit.
5- Charitable sports event. You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event.
See for reference IRS publication 463 - www.irs.gov/pub/irs-pdf/p463.pdf
Sorry if you expected differently.
Let me know if you need any help.
Expert:  Lev replied 2 years ago.
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Taxes, Immigration, Labor Relations