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Like most business owners, you probably incur costs on wining and dining customers or clients.


This would be a deductible business meal, subject to the 50 percent limit.

Special rules: There are several exceptions to the 50 percent rule, such as reimbursements to employees that are treated as taxable compensation to them or reimbursements to independent contractors for their meals; these are fully deductible. If you eat out rather than brown bag it for lunch, the cost is on you. This unfavorable result doesn’t change even if you’re across town and are forced to eat out because of business.

For example, you’re trying to convince a prospect to do business with you in a meeting in your office.

Following your presentation, you take the prospect to lunch.

Also, those subject to Department of Transportation limitations on hours of service, such as independent interstate truckers, can deduct 80 percent rather than 50 percent of meal costs away from home. As long as you aren’t “away from home” (in tax parlance this means out of town), your meal costs when eating alone are not deductible in any amount. If the meal is deductible, you need certain records to back up your claims.

If you are out of town, your meal costs -- eating alone or with others on business -- are subject to the percentage limitation discussed earlier. Technically, no deduction can be claimed without these records, although there are some limited exceptions.


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