Editor's note: Thank you for your interest in this article. The deductibility of business meals is an evolving issue under P.L. 115-97, known as the Tax Cuts and Jobs Act, and this article is no longer available.
The AICPA takes the position that business meals that (1) take place between a business owner or employee and a current or prospective client; (2) are not lavish or extravagant under the circumstances; and (3) where the taxpayer has a reasonable expectation of deriving income or other specific trade or business benefit from the encounter, are not disallowed under Sec. 274(k).
In a letter to the IRS dated April 2, 2018, the AICPA requested that the IRS provide immediate guidance on the change to Sec. 274 discussed in this article and recommended that the IRS confirm that business meals that meet the above criteria are deductible.