Entertainment Expenses and Business Meals

The Entertainment Expenses and Business Meals are.

items that are deductible only if “directly related to” or “associated with” the active conduct of a taxpayer's trade or business. These expenses are not deductible to the extent that they are lavish or extravagant. These expenses include, for example, food, beverages, and entertainment at nightclubs, cocktail lounges, theaters, sporting events, and similar activities.

Allowable meal and entertainment expenses are deductible to the extent of 50% of cost. This reduction rule began in 1986 at 80% to reflect the fact that all meals and entertainment inherently involve an element of personal living expense, and was reduced to 50% for tax years after 1993. Certain exceptions from the reduction rule apply (expenses treated as compensation and reimbursed expenses). Former IRC (check if this IRC provision is current here) §274.