With the increased number of people being fully vaccinated and the decline in reported coronavirus cases, many states have loosened their restrictions on bars and restaurants.  And, as the weather becomes warmer, you may be eager to engage in regular business meetings with clients or other business associates because nothing can replace those face-to-face interactions.

But there’s another reason you might want to take that prospect you’ve been trying to land for the past six months out to lunch.  Under a coronavirus relief provision found in the Consolidated Appropriations Act, 2021, businesses and their associates may deduct 100 percent of their food or beverage expenses incurred at restaurants as long as certain standards are met.

These standards include:

• The business owner or an employee of the business is present.
• The cost of the meal or beverages is not considered “lavish or extravagant.”
• The meal is with a business contact (e.g. a client, employee, vendor or consultant).
• The meal has an “ordinary and necessary” business purpose.

The new provision, which temporarily suspends the 50 percent deduction limitation imposed under Tax Cuts and Jobs Act, is intended to spark business spending at restaurants, which have suffered significant economic losses due to the pandemic.

The 100 percent business meal tax deduction applies to expenses paid in 2021 and 2022.

Questions?  Contact Debra O’Malley at domalley@ctm-cpa.com or (847) 405-0944.