Moss v. Commissioner - 758 F.2d 211 (7th Cir. 1985)

Rule:

To determine whether business lunches are deductible, it is all a matter of degree and circumstance; and particularly of frequency. Daily, for a full year, is too often, perhaps even for entertainment of clients.

Facts:

Taxpayer husband was a partner in a law firm in which the firm's lawyers met for lunch each day at a nearby restaurant to discuss matters relating to the firm's litigation. Respondent Commissioner of the Internal Revenue challenged the taxpayers' deduction for these lunch expenses. The tax court disallowed the deductions. The taxpayers sought review. 

Issue:

Did the tax court err in disallowing federal income tax deductions representing the taxpayer’s share of his law firm’s lunch expense?  

Answer:

No.

Conclusion:

The court affirmed the decision of the tax court, holding that although meals were deductible under 26 U.S.C.S. § 162(a) as an ordinary and necessary expense in carrying on a business, the daily lunch for members of the firm was not a necessary business expense. The meal itself was not an organic part of the meeting to coordinate the work of the firm, and the firm did not need a daily lunch to cement relationships within the members of the small firm. The court further found that the taxpayers did not claim that they incurred a greater daily lunch expense than they would have incurred but for the lunch meetings.