The topic of business meal expenses and entertainment can be a lengthy discussion. In the context of business expenses, entertainment expenses (such as those related to amusement or recreation) are generally nondeductible unless they fall into specific exceptions. The 50% disallowance rule also limits the business deduction for certain otherwise deductible meals.

Here are some key points:

1. Business Meals Deduction:

• Business meals are generally deductible if the taxpayer proves a business connection.
• Meal expenses must be ordinary, necessary, and related to a business event.
• The meal cost should not be lavish or extravagant.
• Proper substantiation is required.
• A taxpayer or representative must be present.

2. Entertainment:

• Entertainment includes food or beverages provided during or at an entertainment activity.
• Food and beverage expenses may be excluded from otherwise disallowed entertainment under specific exceptions, such as:

1. 1. Food and beverages for employees furnished on the business premises.
   2. Compensation to employees who received the benefit.
   3. Expenses incurred in connection with services for another person and reimbursed under an accountable plan.
   4. Recreational or social activities primarily benefiting non-highly compensated employees.

If you need further information, feel free to ask us at (512) 795-0300.