For a business meal expense to be tax deductible (and hold up in an audit), the burden of proof is on the taxpayer. Ensure your expense meets the following qualifications before classifying it as a business meal deduction:
- The expense is ordinary and necessary in carrying on your trade or business. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
- The expense is not lavish or extravagant under the circumstances.
- The taxpayer or an employee is present at the furnishing of the food or beverages.
- Provided to a current or potential business customer, client, consultant, or similar business contact.
- Directly connected to, or associated with, the active conduct of your business.
Document the unique business purpose (with sufficient detail) including the names of those in attendance. Best to write on the receipt.
Sources:
IRS TD-9925 https://www.irs.gov/pub/irs-drop/td-9925.pdf
Ordinary and necessary explanation: https://itap1.for.irs.gov/owda/0/resource/Commentary_Files_Redirect_ITA/en-US/help/ordnec.html
IRS Pub 463: https://www.irs.gov/pub/irs-pdf/p463.pdf
