As Usual – I am Wrong

I have been teaching tax update classes the last couple of weeks and one of the questions still left unanswered is whether taxpayers who reimburse employees for meals using a per diem qualify for the 100% restaurant meals deduction or whether it is still a 50% meal deduction.

During these sessions I surmised that it was likely a 50% meals deduction unless the employee provided some type of evidence that they obtained a meal from a restaurant.

The IRS today shot down my assumption and released Notice 2021-63 that indicates the meals portion of any qualified per diem will be considered 100% deductible.  This is good news for farmers and other taxpayers.

The bottom line is  the qualified portion of a per diem will be 100% deductible for those days occurring after December 31, 2020 and before January 1, 2023.

The law passed late in 2020 allows all meals provided by a restaurant to be 100% deductible if used for business purposes.  However, these meals must be from a restaurant or a business that primarily prepares meals for consumption on-site or off-site.  Meals obtained from a grocery or convenience store do not qualify.

Most trips that I make to the Midwest include at least one stop at Casey’s to get a slice of pepperoni pizza.  That does not qualify for the 100% deduction but that pizza does have the right amount of grease (actually Casey’s pizza is pretty good).