Meal Deductions Made Simple Guidance for California Business Owners
THE RIGHT WAY TO TRACK AND DOCUMENT YOUR BUSINESS MEALS: WHAT THE IRS EXPECTS • Save detailed receipts: Include date, time, and location. • Record attendees: Note names, titles, and relationships to your business. • Describe the purpose: Write a brief explanation of why the meal occurred. • Link to business outcomes: If the meal resulted in decisions, deals, or next steps, note them. TAKE CONTROL OF YOUR TAX STRATEGY TODAY Meal deductions are just one part of a bigger tax strategy. At Dahl Law Group, our new Dahl Tax Group helps California business owners integrate tax and legal planning under one roof. • Proactive planning throughout the year • Stronger protection of deductions • Confidence that nothing slips through the cracks as your business grows Combining tax, business law, and planning under one roof gives owners the confidence they need. Get expert guidance on properly preparing and documenting your business meal deductions at Dahl Law Group.
Business owners often overestimate deductions, especially meal expenses. This guide explains the rules and recordkeeping requirements, another way the Dahl Law Group helps California businesses maximize deductions and minimize risk. CAN YOU DEDUCT A MEAL BECAUSE YOU TALKED BUSINESS? Casual work talk over dinner isn’t enough; the IRS requires proof that the meal had a legitimate business purpose. To qualify, business owners must clearly connect: • Where and when the meal took place. • The attendees present and their relationship to the business. • The purpose of the discussion to support a specific company goal. UNDERSTANDING THE SUTTER RULE: WHAT BUSINESS OWNERS MUST KNOW The Sutter Rule comes from Sutter v. Commissioner , where the court denied a meal deduction because receipts and vague claims of “business discussion” weren’t enough. The IRS requires clear proof of a legitimate business purpose to comply with the 50% deduction rule. • Business purpose: A brief but clear explanation of why the meal mattered to your company. • Guest list: Names and business relationships of everyone present. • Discussion notes: A summary of what was discussed. • Expense reasonableness: Costs that are consistent with business norms, not personal extravagance. DEDUCTIBLE VS. NON-DEDUCTIBLE BUSINESS MEALS Most ordinary business meals are 50% deductible, while lavish, social, or entertainment expenses are generally non-deductible under current IRS rules, especially after the 2025 changes.
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Scenario
Deductible?
Meal with a client discussing a project with documented notes
Yes – 50% deductible
Jan. 25 may be a day for turning the world upside-down, but when it comes to estate planning, sticking to the facts is the best way to keep everything right-side-up.
Dinner with friends, no business purpose
No
Lavish meal with no business outcome
No
–Elliott Harry
Meals are included as part of employee travel for business
Yes – 50% deductible
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