Entertainment / Meal Receipts

9 Replies

This is a very basic question so I apologize in advance:

I racked up a LOT of meal / entertainment receipts for being an agent / Property manager.  Am I trying to use them to evade taxes and deduct my day to day meal expenses ? Not really. I do believe that networking is the way to go and I go to A LOT of networking events where I meet locals, discuss RE (and other stuff) , and get insights on local market conditions. I invited my neighbor for lunch the other day and he told me about a property for sale that I ended up making an offer on it.  

Reading a tax book, it seems that I need to document each and every receipt and mention who I met with ,etc , etc. It's a lifestyle for me. Should I deduct these expenses or should I just suck it up?

Again, I am really not trying to be sneaky here, but I do believe that you have to go out there, network, buy people a few drinks and get the inside news from the locals to get the REAL deals that you won't find on the MLS.

Like the book says.  Document your meals to the best of your ability.  You can note what they each were in connection with.  You can use a seperate little book just for your meal documntation.

I have to do this when I'm out in the corporate world too.  Must provide business purpose and list the attendees.  It's easy if you have a system.  I usually write it on the receipt and then take a picture of it with my phone.  Attach it to the expense in quickbooks or whatever system you're using.

@Barbara G.

 agreed but the question is : is what I am doing okay for deducting these expenses? As an agent who's just networking, can I deduct them? Overall general networking vs. specific business meetings

Ask your accountant if he thinks that will be acceptble. 

If it is acceptable does it raise any red flags? 

What is the % of the amount of money you are deducting as compared to your income?

Any money spend in - on - for business can be deducted as long as you can prove it when time comes. I would follow Drey advice and that is exactly what we tell our clients. Here is my suggestion on tracking meals whether you use QuickBooks or any other software. Under the category for Meals create subs:

- Clients

- Networking

- Conference

- Other meals (that is usually when you go get Dunkin Donut coffee just for your self)

The first three are 100% deducted but not the other meals. If you do not track it right, your accountant will not know the difference and they usually deduct 50% of meals. (95% do not even ask)

As to entertainment there is a cap. But again track them accordingly and you will be able to reduce your taxes. How much - all depends on your spending and income.

Gita Faust

The last tax book I read called Lower your taxes stated the only time you have to provide recipes are if its over $50. It would also stated the irs code with it.

Thanks guys . great responses.... I thought all meal expenses are 50% only and you're right @Gita Faust   my accountant did not ask.

Thank you

@Gita_Faust , what rule are you basing your 100% deduction of these meal expenses on?  

Publication 463 clearly states that the 50% limit would apply in the first three cases.

"The 50% limit applies to business meals or entertainment expenses you have while:

  • Traveling away from home (whether eating alone or with others) on business,
  • Entertaining customers at your place of business, a restaurant, or other location, or
  • Attending a business convention or reception, business meeting, or business luncheon at a club."

Also you might want to double check the tax court cases in regards to eating meals alone. I read a case where an attorney ate out breakfast every day alone and did work at the same time in a dinner near his office. His deductions were invalidated.

@StevenHamilton

Can you shed some light here?  My knowledge of this area of the tax code is a bit weaker than others.

I am sorry about bring this thread from the dead. BUT...What about the receipts for meals while working on your property? I purchase and renovate my own properties. While I am renovating my properties I am forced to eat outside my home. I do have to say that none of my properties located beyond 20 miles from my home address. Are they still deductible?

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