May 3, 2021 10:52 pm

What’s a Restaurant?

Usually, the cost of a business meal is 50% deductible. However, for 2021 and 2022, the cost is 100% deductible for meals furnished by restaurants. The IRS has now defined the term “restaurant” (Notice 2021-25). It does not include a business that primarily sells pre-packaged food or beverages not for immediate consumption, such as a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine or kiosk. Remember that the applicable percentage also applies to per diem meal rates (e.g., GSA standard meal rates and the IRS’s high-low substantiation rate for business meals).

Basic rules for deducting business meals continue to apply. For example, they cannot be lavish or extravagant under the facts and circumstances and proper substantiation is required.

advertisement
Tax Glossary

Appreciation in value

Increase in value of property due to market conditions. When you sell appreciated property, you pay tax on the appreciation since the date of purchase. When you donate appreciated property held long term, you may generally deduct the appreciated value.

More terms