An analysis of your meals and entertainment (M&E) expenses can help ensure you are making the most of your business expense deductions. A company’s M&E expenses are generally limited to a 50 percent deduction, however, there are exceptions that allow a deduction of 100 percent. An evaluation of M&E expenses may reduce your taxable income.
The IRS now allows statistical sampling to determine adjustments to M&E expenses in Revenue Procedure 2011-42. Application of one of the approved sampling methods allows for a manageable, efficient process to determine the accurate deduction for multiple tax years. For example, we evaluated 400 records for a taxpayer from a total of 50,000 M&E expense items and extrapolated the results to the M&E total spending.
The Advanta M&E specialists have worked with Fortune 500 companies to determine the M&E deductions, provide the supporting documentation and recommend improvements to current policies to maximize deductions in future tax years. The IRS statisticians helped us develop our process so IRS examination teams have easily followed the results.