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Making a pitch for a bigger deduction

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in Small Business Tax

Q. I treated someone to lunch after a marketing pitch. Is the meal 100% deductible as a marketing expense? E.S., California

A. No. If a lunch follows a “substantial business discussion,” such as a marketing presentation, the cost is deductible under the general rules for business entertainment and meals. Under those rules, only 50% of meal costs can generally be deducted. (While certain meal exceptions qualify for a 100% deduction, business entertainment meals are not among them.)

Tip: According to IRS Pub. 463, Travel, Entertainment, Gift, and Car Expenses, distributing free food and beverages may be 100% deductible as an advertising expense, but only if provided to the general public. (See page 11 at www.irs.gov/pub/irs-pdf/p463.pdf.)

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