What are the business entertainment expenses & meals deductions under IRC §274?
IRC §274 limits food and beverage expense deductions and generally disallows entertainment expense deductions. Deductible food and beverage expenses are subject to a 50% limitation, while entertainment expenses are nondeductible, unless an exception applies.
What are the rules for employer-provided meals?
Under §274(o), added by the OBBBA, no deduction is allowed for expenses paid or incurred after 2025 with respect to:
- Meals furnished to employees that are excludable under §119(a) (meals furnished for the convenience of the employer); and
- Food and beverage expenses for an employer-operated facility (defined in §132(e)(2)).
However, §274(o) does not apply to expenses described in §274(e)(8) (entertainment sold to customers) or §274(n)(2)(C) (meals provided on certain commercial vessels, certain oil and gas platforms and drilling rigs and at related support camps, and certain fishing vessels or at certain fish-processing facilities).
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