Meals, Entertainment, and Gifts
There are many times when a meal, a gift, or entertainment is a very legitimate business expense—just as legitimate as advertising or other promotional expenses. However, there are also many times in which these “business” expenses are really just an excuse to have some fun and get a write-off in the process. Because it is not easy for the IRS to discern between legitimate expenses in these categories, and those that are not, there are strict rules imposed on the record-keeping requirements for these expenses. There are also significant limitations placed on the dollar value that you can deduct for these expenses. In many cases, 50% of the cost is taken right off the top of what you are allowed to deduct. I suppose this is Congress’s way of dealing with—and limiting—the abuse of this deduction. Even so, there are some great opportunities available to save on your tax bill by properly deducting meals, entertainment, and gift expenses.