Deducting Business Meals in 2021-22

[Kram BergGold]

Restaurant Business Meals are 100% deductible in 2021 and 2022. When away from home on business if you elect the IRS Meals Per Diem Rate, will these be 100% deductible or 50% deductible?

[TAXNJ]

IRS:

https://www.irs.gov/pub/irs-drop/n-21-52.pdf

From GSA:

https://www.gsa.gov/travel/plan-book...iem-highlights

also, covered in depth see The TaxBook

[TaxGuyBill]

I have not seen any guidance in that matter. I am suspecting it is still 50%.

[terryats]

You would deduct 100% of Per Diem Rate if meals were taken in a restaurant. See ? 274(n)(2)(D)

[Kram BergGold]

Terryats, See ? 274(n)(2)(D) I don't know what this refers to. Please explain.

[terryats]

Kram, that is reference to US code 274 which talks about disallowance of certain expenses, and exceptions. It explains that in general meals are limited to 50% except for 2021-22 which is not limited. I (unlike Bill) believe that means actual or Per Diem. If you think about it, Per Diem is what the Irs believes is a fair cost, so why would you cut that cost in half? That is my opinion, as the guidance from Irs just says meal cost are deductible at 100% if eaten in a restaurant, and I have not seen any thing that specifically refers to Per Diem.
Here is link to us code 274: https://www.law.cornell.edu/uscode/text/26/274

[TaxGuyBill]

I understand what Terry is saying, but problems arise.

For an employer that is reimbursing an employee: How is the employer going to know where the food is from? Is the employer now supposed to substantiate everything by geting an itemized list of where they eat? The purpose of the Per Diem is to avoid substantiation.

For a self employed person: What is some food is eaten in restaurants and some not in restaurants? Are you going to itemize each meal by breaking up each day by the three meals? And if you do that, and then let's say the taxpayer skips lunch, are you just going to not take the lunch portion of the Per Diem rate? Or does a bottle of water count as lunch?

Again, I totally understand what Terry is saying, but due to the complications, I'm surprised that the IRS has not commented on it yet.

[New York Enrolled Agent]

TGB - is IRS Notice 2021-25 of any help?

[TaxGuyBill]

TGB - is IRS Notice 2021-25 of any help?

Not really, I was disappointed when that came out and it doesn't even refer to the Per Diem. It pretty much just clarifies what "restaurant" means.

Are you saying that EACH meal needs to substantiated to whether it was furnished by a restaurant?

[Kram BergGold]

I wrote to a tax expert. I was told, receipted restaurant meals qualify for a 100% deduction. Per diems get 50% treatment. Non restaurant meals get 50% haircut. The method you choose can mix and match from trip to trip just like in the past.

[terryats]

Did your "Tax Expert" quote an official source, or was that his opinion. As TaxGuyBill pointed out, the irs has not put any guidance on Per Diem, and I would consider Bill a "Tax Expert" for sure