What Meals and Entertainment Deductions Can a Dentist Take?

I’ve read that this category (meals and entertainment deductions) is highly scrutinized by the IRS, so I want to get it right. There are two types of meals and entertainment deductions: 50% and 100%.

I have a monthly meeting with my whole staff at a restaurant: 100%
I have a monthly meeting with my whole staff at the office, delivered meal: 100%
I go to my monthly dental society dinner meeting: 100%.

Q.1: I meet my dental, medical friends out at a restaurant/bar, have drinks and eats to discuss our various taxations, and buy some food and drink. The entire encounter is documented as a professional meeting: 50% or 100%???

Q.2: My wife is my designated “office manager,” and legitimately handles the ordering of supplies, the paying of the bills, the order and cleanliness of the office, as well as the payroll and certainly future planning. When I go out to dinner with her, we always talk business. If I keep the record of the meeting, (a) how often can we reasonably go out to discuss these issues and have a deduction, and (b) are these 100% meals and entertainment deductions, or 50%? Is there a specific trigger of either documentation or inclusion of all employees?


Here’s how I’ve always discussed it with my dental clients as the way to deciding. It is not stated like this in the code, just a common sense way think about it:

When the meal is incidental to the meeting, the meal is a meeting expense and 100% deductible.

If the meeting is incidental to the meal, it’s meals and entertainment, 50% deductible. So you plan on having “dinner” with colleagues and you happen to discuss business, that’s a meal. Maybe it’s not even deductible?

Another way to think about “dinners”:

Everyone has to eat, personal meals are not deductible. If you decide to go out to dinner with your wife, whether she’s an employee or not, it’s a meal, NOT a meeting. Now, that meal MIGHT be a business meal if you also “intend” to discuss business, that’s up to you. Make sure you document the topics and even include any follow-up actions required. For example, if you discussed an employee’s job performance, make sure one of you has a meeting with that employee within a couple of days to go over the issues and place that with the meal receipt.

Documentation the key.

This won’t guarantee you that an agent won’t ask about it or argue with you on its deductibility; however, you have enough “substantiation” to make a solid argument in my opinion.

Let’s just say, for argument’s sake, you don’t have documentation…what happens?
If audited they’ll disallow the deduction.

What if other meals of a business nature are coded as “entertainment” and not documented at all?
Same as above….most of my clients have excellent memories though…..if audited they always seem to remember who they were with, how they relate to the practice and the topics discussed… 

What about a study club? I also wonder where that falls.

True study club meal? Totally deductible, no question about it. Some of the study clubs I’ve spoken at have a set price for the dinner and they offer a choice of selected appetizers, main courses and deserts and the club builds that into the cost of the monthly meeting or dues for that month so there’s no “meal” that the individual pays for, the cost is to attend the meeting and the meeting provides food. No different than attending a full day CE course at a hotel conf room and they provide lunch. Do they break out the price of the lunch from the cost of the CE? Absolutely not.

Now, if one wants to have “drinks” with a few selected colleagues to discuss one of their cases and call it a study club, just remember, who’s the expense going to? The study club or the restaurant? When audited you can call it whatever you want, just be prepared to have it questioned and be prepared to support your position. Worst case is they disallow it and you’ll owe a few bucks.

By the way, there’s nothing in the tax code that PROHIBITS a taxpayer from arranging their affairs around business meetings. It DOES prohibit one from trying to deduct a personal expense. If you know the rules, then you know how to arrange your affairs to meet the rules. If it meets the rules, it’s deductible and can’t be disallowed.

I don’t mean to make it sound so simple; it certainly takes a little effort to abide by the rules in some situations, however, that little effort can generate a 40% discount!

For more information, please contact info@dentalcpas.com