Earlier this year, the Consolidated Appropriations Act (CAA) 2021 introduced a temporary 100% deduction for expensing business meals purchased from qualifying restaurants after Dec. 31, 2020, and before Jan. 1, 2023.
Under prior law, the deduction for business meals was limited to 50% of the cost. However, for 2021 and 2022, the deduction is doubled to 100% for the cost for meals provided by restaurants. Under Notice 2021-25, the IRS defines qualifying restaurants as businesses that prepare and serve food and drinks for immediate consumption, whether on or off-premises. This temporary 100% deduction was designed to help restaurants, many of which have been hard-hit by the COVID-19 pandemic.
Certain meal expenses continue to be only 50% deductible, including food and beverages not for immediate consumption, meals provided at eating facilities located on the employer’s business premises and meals provided at employer-operated eating facilities which are treated as a de minimis fringe.
Sincerely,
Maryna Varabyova, CPA
(877) 677-3737
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