Typically business expenses for meals and entertainment are only 50% deductible for income tax purposes pursuant to IRC section 274(n). This is because the government feels that the taxpayer receives some enjoyment, so only 1/2 is deductible. But for financial statement purposes, 100% is an expense.
However, there is a special rule all business owners should be aware of. Meals furnished to employees can be 100% deductible pursuant to IRC 274(e) if they furnished to employees on the employers facility. We discuss this law with our clients all the time. These sorts of meals should be tracked separately on the taxpayers general ledger. So meals that our brought into the business or delivered and the food is for the employees would qualify as 100% deductible. Don’t forget this one when you are preparing your tax returns.
