Can I deduct drinks on my taxes.?

Question

I am in a general partnership with my brother and he seems to think that any drinks we and lunches while we are working are deductible.

Answer 1

The IRS has a simple rule. Everyone would have to eat even if they aren't employed...this means unless you can show a reason that the food and/or drinks are for an accepted business practice (such as entertaining clients or potential clients) your pretty much out of luck. Oh, there is another exception...if you provide meals to employees for a business reason...but again there has to be a business reason (it can't be just a perk).

Hope this helps.

Answer 2

They wouldn't be deductible unless you're entertaining clients/potential clients for business purposes.

[added]

Any questions of whether or not a business expense is deductible should really be discussed with your accountant and/or tax expert to get definitive answers.

Answer 3

Nope.

First of all, any business meals or business entertainment is only 50% deductible.

Second of all, it's up to you and your brother to prove that the meal or drinks is a legitimate business expense and was necessary for the business.  You can't just pick up lunch for the two of you and try to say it's a business lunch, because it isn't.  Even business owners are expected to pay for their own lunches and other meals.  Unless, as I said, you can document a valid and legitimate reason why the meal was necessary from a business standpoint.

Here's the general rule you need to understand:  If the IRS ever audits your business, THEY don't have to prove you made mistakes or intentionally cheated on your taxes.  All they have to do is question an expense or a deduction, and the burden of proof is on YOU.  If you can't prove it to their satisfaction, they can disallow the deduction, recalculate your taxes owed, and slap on fines, penalties, and interest.

When in doubt - don't.  For everything else, keep the receipts, keep your calendars and day planners, keep a good diary, write down everything you do that involves customers or potential customers.  Keep enough records so that 6 years from now, anybody who needs to know why you and your brother had drinks on August 18, 2008 with Joe Doe can FIND that information and understand why it was a business expense.