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IRS.gov Website
Publication 463
taxmap/pubs/p463-006.htm#en_us_publink100033862

50% Limit(p11)

rule
In general, you can deduct only 50% of your business-related meal and entertainment expenses. (If you are subject to the Department of Transportation's "hours of service" limits, you can deduct 80% of your business-related meal and entertainment expenses. See Individuals subject to "hours of service" limits, later.)
The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.
Figure A summarizes the general rules explained in this section.
The 50% limit applies to business meals or entertainment expenses you have while:
taxmap/pubs/p463-006.htm#en_us_publink100033863

Included expenses.(p11)

rule
Expenses subject to the 50% limit include:However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit.
taxmap/pubs/p463-006.htm#en_us_publink1000136361

Figure A. Does the 50% Limit Apply to Your Expenses?

There are exceptions to these rules. See Exceptions to the 50% Limit.

taxmap/pubs/p463-006.htm#en_us_publink100033864
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Application of 50% limit.(p11)

rule
The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later.
The 50% limit also applies to certain meal and entertainment expenses that are not business related. It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. It also applies to the cost of meals included in deductible educational expenses.
taxmap/pubs/p463-006.htm#en_us_publink100033866

When to apply the 50% limit.(p11)

rule
You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication.
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Example 1.(p11)

You spend $200 for a business-related meal. If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Your deduction cannot be more than $45 (50% × $90).
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Example 2.(p11)

You purchase two tickets to a concert and give them to a client. You purchased the tickets through a ticket agent. You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Your deduction cannot be more than $80 (50% × $160).
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Exceptions to the 50% Limit(p11)

rule
Generally, business-related meal and entertainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.
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Expenses not subject to 50% limit.(p11)

rule
Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.
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1 - Employee's reimbursed expenses.(p12)
If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.
taxmap/pubs/p463-006.htm#en_us_publink100033872
2 - Self-employed.(p12)
If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met.
In this case, your client or customer is subject to the 50% limit on the expenses.
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Example.(p12)

You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. If the client can deduct the expenses, the client is subject to the 50% limit.
If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit.
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3 - Advertising expenses.(p12)
You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.
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4 - Sale of meals or entertainment.(p12)
You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit.
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5 - Charitable sports event.(p12)
You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later.
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Individuals subject to "hours of service" limits.(p12)

rule
You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's "hours of service" limits. The percentage is 80%.
Individuals subject to the Department of Transportation's "hours of service" limits include the following persons.