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Schedule C Expenses - Meals and Entertainment

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Schedule C Expenses - Meals and Entertainment

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Line 24b

Enter your total deductible business meal and entertainment expenses. This includes expenses for meals while trav-eling away from home for business and for meals that are business-related enter-tainment.

Deductible expenses. Business meal expenses are deductible only if they are (a) directly related to or associated with the active conduct of your trade or busi-ness, (b) not lavish or extravagant, and (c) incurred while you or your employee is present at the meal.

You cannot deduct any expense paid or incurred for a facility (such as a yacht or hunting lodge) used for any activity usually considered entertainment, amusement, or recreation.

Also, you cannot deduct membership dues for any club organized for busi-ness, pleasure, recreation, or other social purpose. This includes country clubs, golf and athletic clubs, airline and hotel clubs, and clubs operated to provide meals under conditions favorable to business discussion. But it does not in-clude civic or public service organiza-tions, professional organizations (such as bar and medical associations), busi-ness leagues, trade associations, cham-bers of commerce, boards of trade, and real estate boards, unless a principal pur-pose of the organization is to entertain, or provide entertainment facilities for, members or their guests.

There are exceptions to these rules as well as other rules that apply to skybox rentals and tickets to entertainment events. See chapters 1 and 2 of Pub. 463.

Standard meal allowance. Instead of deducting the actual cost of your meals while traveling away from home, you can use the standard meal allowance for your daily meals and incidental expen-ses. Under this method, you deduct a specified amount, depending on where you travel, instead of keeping records of your actual meal expenses. However, you must still keep records to prove the time, place, and business purpose of your travel.

The standard meal allowance is the federal M&IE rate. You can find these rates on the Internet at www.gsa.gov. Click on "Per Diem Rates" for links to locations inside and outside the conti-nental United States.

See chapter 1 of Pub. 463 for details on how to figure your deduction using the standard meal allowance, including special rules for partial days of travel.

Amount of deduction. In most cases, you can deduct only 50% of your busi-ness meal and entertainment expenses, including meals incurred while away from home on business. However, for individuals subject to the Department of Transportation (DOT) hours of service limits, that percentage is increased to 80% for business meals consumed dur-ing, or incident to, any period of duty for which those limits are in effect. Individ-uals subject to the DOT hours of service limits include the following.

Certain air transportation workers (such as pilots, crew, dispatchers, me-chanics, and control tower operators) who are under Federal Aviation Admin-istration regulations.

  • Interstate truck operators who are under DOT regulations. 
  • Certain merchant mariners who are under Coast Guard regulations.

However, you can fully deduct meals, incidentals, and entertainment furnished or reimbursed to an employee if you properly treat the expense as wages sub-ject to withholding. You can also fully deduct meals, incidentals, and entertain-ment provided to a nonemployee to the extent the expenses are includible in the gross income of that person and reported on Form 1099-MISC. See Pub. 535 for details and other exceptions.

Daycare providers. If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to figure the deductible cost of meals and snacks provided to eligible children. See Pub. 587 for details, in-cluding recordkeeping requirements.

 


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Views: 2376 Created on: Jun 15, 2013
Date updated: Sep 16, 2015

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