​New Guidance on Food and Beverage Deductions for Businesses

Through the end of 2021, businesses can claim 100% of their food or beverage expenses paid to restaurants.

According to guidance from the U.S. Treasury Department and IRS, there are a few rules that govern the 100% deduction:

• The business owner or an employee of the business has to be present when the food or drinks are provided.
• The expense can’t be “lavish or extravagant” under the circumstances.
• The food and drinks have to come from restaurants, which the government defines, in this case, as “businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption.” Food and drink expenses that come from grocery stores and convenience stores don’t qualify.
• The expenses can’t be incurred at employer-operated eating facilities, even if a third party operates them under contract with the employer.

The provision was part of the Taxpayer Certainty and Disaster Relief Act of 2020 and runs from Jan. 1, 2020, through Dec. 31, 2021. Typically, there’s a there’s a 50% limit on how much businesses can deduct for food or drinks.

If you have questions about this new guidance or other expenses for your business, reach out to us.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.