Commonly overlooked exceptions to the 50% disallowance for meal and entertainment expenses

May 2014

Overview

A taxpayer’s deduction for business meal and entertainment expenses generally is limited to 50% of the costs incurred.  Furthermore, certain entertainment costs, like those related to country club dues or luxury suites, may be completely disallowed as a deduction.  While many taxpayers appropriately limit their deduction related to meal and entertainment expenses based on the 50% disallowance described above, some taxpayers overlook exceptions that may be applicable.  Theses exceptions may allow taxpayers to deduct the entire cost of certain meal and entertainment expenses, thus permanently reducing their income tax liability.

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