Q. If we move a business lunch from a country club to a restaurant, can our business deduct the full cost? M.T., Larchmont, N.Y.
A. No. The general rule limiting entertainment and meal deductions to 50% of the cost applies regardless of the location where the entertainment or meal takes place. However, there are certain exceptions to the 50% rule, including food and beverages provided to employees on the business premises and food and beverages provided at company recreational activities in which all employees are invited to participate. For instance, the cost of a company picnic is 100% deductible.
Tip: If you hold a companywide event like a picnic, you can include business clients.