Though the answer is correct as it applies to employers, it fails to answer whether this applies to a contractor relationship. You might want to be careful in taking such deduction in such said way as it may constructively admit to an employer-employee relationship conclusively requiring a payroll report.
I do not believe the IRS will hammer on the expense being business-related or deductible but they could nail your client for failing to meet payroll requirements as this could be interpreted as a fringe-benefit to the contractor. It would simply open a new can of worms.
You might want to take the deduction as a 50% allowable meal expense. Sec. 274(k), which was not amended by the TCJA, does not allow a deduction for the expense of any food or beverages unless (1) the expense is not lavish or extravagant under the circumstances, and (2) the taxpayer (or an employee of the taxpayer) is present when the food or beverages are furnished. Sec. 274(n)(1), which was amended by the TCJA, generally provides that the amount allowable as a deduction for any expense for food or beverages cannot exceed 50% of the amount of the expense that otherwise would be allowable.
Under the interim guidance, taxpayers may deduct 50% of an otherwise allowable business meal expense if:
- The expense is an ordinary and necessary business expense under Sec. 162(a) paid or incurred during the tax year when carrying on any trade or business;
- The expense is not lavish or extravagant under the circumstances;
- The taxpayer, or an employee of the taxpayer, is present when the food or beverages are furnished;
- The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
- For food and beverages provided during or at an entertainment activity, they are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts.
