Concierge Business -Lunches

[equinecpa]

I have a client who runs a concierge business (S corporation). Part of their services includes taking clients to appointments and sometimes lunch. I've advised them that when possible have the client pay for the lunch so they don't have to worry about weather the deduction for the meal will be restricted or not.

What happens in the case that my client pays for the whole lunch? The lunch is really a COGS and will be included in the bill but my client is benefiting because they did receive food. Is the whole lunch expense limited to a 50% deduction? If they detail the invoice to show the lunch cost as an itemized expense will the deduction for the meal be restricted?

There are also times my client will reimburse a subcontractor for taking clients to lunch -is the reimbursement also restricted to 50% deduction?

I posted a similar question a few years ago (http://www.thetaxbook.com/forums/showthread.php?t=10383) but in that case it was a self-employed person getting reimbursed - I"m not sure if the rules will differ for an S-corporation?

[erchess]

I don't see why it would be limited

I think the full cost of the meal is a cogs and I think it is a deductible in full expense to the client who pays the full bill. I don't have a cite though so I may stand corrected here.

As a separate note, this is precisely how each complication in the tax code arose. Someone in Congress finds out that people are doing something and finds out from a staffer and/or the IRS that under current law the procedure is at least defensible if not unassailable so they put in a change. I don't have a problem with what these people are doing but I think many in congress would see it as an unethical if not illegal getting around the rule that business meals are only half deductible.