I keep asking this ? but I think I am asking it the wrong way...?

Question

I know that I am able to deduct up to 50% of my business dinners and food ect... But I am looking for the Ceiling of this deduction. I know if I have $1,000,000.00 in reciepts the IRS will only let me write of how much of that million? $2,500? $5,000? ???????? what is the number?

Answer 1

There are cases where you are NOT limited to the 50% even! For example, you hold a seminar where the public is invited. All the meals are 100% deductible.

The test is not, 'what's the most amount of $ I can deduct", but rather "Do I have a BUSINESS purpose to my meal dedcution?" If the meals or entertainment are necessary or common AND related to the business activity you earned your money from, then they are deductible. Otherwise they are NOT.

And you cannot expect the IRS to allow you to claim that 360 dinners last year were all for business because you discussed your "business" with your spouse or your friend.

--A Damn Fine Tax Advisor

Answer 2

The ceiling is the actual amount you paid. If you had $10,000,000 in revenue and paid $2,000,000 for business dinners, you would be allowed to deduct $1,000,000. (You better have receipts and records proving there was a business purpose because you are in an area that has a relatively high percentage of IRS audits.)

On the other hand, if you had only $500,000 in revenues, writing off $1,000,000 for business dinners would be (ahem!) suspicious.

Answer 3

There's not a specific limit, but if you have a lot, be ready to prove the expenses in an audit, because you're real likely to see an audit.

Answer 4

There isn't one. Large companies have those running into the $ millions.