You can deduct these as 100%. Considered Refreshments for clients and not a meal.
With the business entertainment deduction repealed for tax years 2018-2025, some people (including us) were left wondering if going out to dinner with a business associate or taking clients to happy hour is considered "entertainment" and therefore not deductible.
To provide interim guidance, the IRS issued Notice 2018-76, which states that business meals aren't treated as entertainment (which means they're still 50% deductible) as long as all five of these conditions are met:
- The expense is an ordinary and necessary expense in conducting the trade or business.
- The expense is not lavish or extravagant under the circumstances.*
- The taxpayer or his/her employee is present at the meal.
- The meal is provided to a current or potential business customer, client, consultant, or similar business contact.
- For meals provided at or during an entertainment activity, the meals are either purchased separately from the entertainment or the meal and entertainment costs are separately stated on a bill, invoice, or receipt.†