Take that Client to Dinner: Business Meals Are Deductible in 2021 and 2022

The Consolidated Appropriations Act, 2021, increased the business-meal deduction for the cost of food and beverages provided by a restaurant from 50 percent to 100 percent in 2021 and 2020 to promote increased business spending at restaurants.

The temporary allowance of 100% meal deductions applies only to food and beverages provided by a restaurant and only for tax years 2021 and 2022.

Notice 2021-25 states: “A business may claim 100 percent of food or beverage expenses paid to restaurants, assuming the business owner (or employee) is present when provided and the expense is not lavish or extravagant under the circumstances.”

Under the temporary provision, restaurants include businesses that prepare and sell food or beverages to retail customers for immediate on-premises and/or off-premises consumption.⁣
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However, in addition to barring grocery stores and convenience stores, the term “restaurant” also does not include specialty food stores; beer, wine or liquor stores; drug stores; newsstands; and vending machines or kiosks.⁣

We understand that this can be confusing since the IRS does not clarify how a consumer will determine if a business ‘primarily’ serves pre-packaged food? In addition to not knowing what the standard is for ‘primarily’ nor what constitutes pre-packaged food (e.g., does it include food provided in a grab-and-go model?).

You can read the full N-2021-25 Notice from the IRS Website here.

Here is a list of Yelp’s top rated Restaurants in the Central Valley that qualifies for the 100% expense deduction:

1. Heirloom 8398 N Fresno St Ste 101 Fresno, CA 93720
2.  The Lime Lite 1054 W Shaw Ave Fresno, CA 93711
3. The Annex Kitchen 2257 W Shaw Ave Fresno, CA 93711
4. Spicy J’s 165 E Paseo Del Centro Fresno, CA 93720
5. Bella Pasta Trattoria Italiana  6745 N Palm Ave Fresno, CA 93704
   

If you have any questions please don’t hesitate to reach out! You can schedule a FREE consolation here.

We look forward to chatting with you and are so excited for this temporary notice that allows us the opportunity to support local restaurants in need of our help!

And don’t forget to follow us on Instagram so you don’t miss out on the latest tax laws, economic payments, and more!

Roos & McNabb, CPA 
Fresno, California