Business Meals Deduction

§ 274. Disallowance of certain entertainment, etc., expenses(a) Entertainment, amusement, recreation, or qualified transportation fringes(1) In generalNo deduction otherwise allowable under this chapter shall be allowed for any item—(A) ActivityWith respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, or (B) FacilityWith respect to a facility used in connection with an activity referred to in subparagraph (A). (2) Special rulesFor purposes of applying paragraph (1)—(A) Dues or fees to any social, athletic, or sporting club or organization shall be treated as items with respect to facilities. (B) An activity described in section 212 shall be treated as a trade or business. (3) Denial of deduction for club duesNotwithstanding the preceding provisions of this subsection, no deduction shall be allowed under this chapter for amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or other social purpose. (4) Qualified transportation fringesNo deduction shall be allowed under this chapter for the expense of any qualified transportation fringe (as defined in section 132(f)) provided to an employee of the taxpayer. (b) Gifts(1) LimitationNo deduction shall be allowed under section 162 or section 212 for any expense for gifts made directly or indirectly to any individual to the extent that such expense, when added to prior expenses of the taxpayer for gifts made to such individual during the same taxable year, exceeds $25. For purposes of this section, the term “gift” means any item excludable from gross income of the recipient under section 102 which is not excludable from his gross income under any other provision of this chapter, but such term does not include—(A) an item having a cost to the taxpayer not in excess of $4.00 on which the name of the taxpayer is clearly and permanently imprinted and which is one of a number of identical items distributed generally by the taxpayer, or (B) a sign, display rack, or other promotional material to be used on the business premises of the recipient. (2) Special rules(A) In the case of a gift by a partnership, the limitation contained in paragraph (1) shall apply to the partnership as well as to each member thereof. (B) For purposes of paragraph (1), a husband and wife shall be treated as one taxpayer. (c) Certain foreign travel(1) In generalIn the case of any individual who travels outside the United States away from home in pursuit of a trade or business or in pursuit of an activity described in section 212, no deduction shall be allowed under section 162 or section 212 for that portion of the expenses of such travel otherwise allowable under such section which, under regulations prescribed by the Secretary, is not allocable to such trade or business or to such activity.