With the signing of the new COVID-19 relief bill this past weekend we wanted to continue to highlight various provisions that we believe will not only impact 2020 tax returns but future tax planning as well. One area that has gone slightly under the radar is a provision to incentivize businesses in the coming year to spend on business meals.
The bill provides a temporary 100% deduction for business food and beverage expenses provided by a restaurant that are paid or incurred in 2021 or 2022. Currently, the deduction is available for only 50% of business meal expenses. Entertainment expenses generally remain non-deductible. The bill will lead to the increased spending in restaurants and help to revive the restaurant industry badly battered by the pandemic. This temporary deductibility rule will not only apply to dine in but also to delivery services such as Grubhub and Doordash as well. Businesses should consider this in their budgeting plans for 2021 and 2022.
There are various other provisions included in the new covid relief bill recently passed. We here at Chapman, Hext will continue to pull details on various topics that could be relevant and provide that information. If you have any questions regarding the Covid-19 Relief bill and how they might impact you and your business, or require any other assistance with your tax planning and compliance needs, please do not hesitate to contact one of our knowledgeable team members.