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MEETING CLIENTS face-to-face is more important than ever in a bad economy - and if that encounter happens over a meal in a restaurant the checkis a business expense that's 50 percent tax deductibla The restaurant industry, reeling from the consumer-spending slump, is lobbying Congress to restore the full meal and entertainment tax deduction, which was cut during the 1986 tax law overhaul from 100 percent to 50 percent. In the 1980s, the meal deduction was painted as a "three-martini lunch" abuse of the tax system; today, the country is in the grip of massive layoffs and widespread business failures from the recession.
TAX PLANNING Christina Mazza The Stage Left restaurant, in New Brunswick, closes for lunch Monday to Thursday. Francis Schott, co-owner, says if Congress restores the meal deduction to 100 percent, Stage Left would serve lunch all week, and also hire more employees. Wine & dine with tax in mind By Beth Fitzgerald Restaurant owners are eagerly optimistic that would create jobs.” Attitudes have shifted, she said. In the 1980s, the meal MEETING CLIENTS face-to-face is more important than ever in a bad economy — and if that encounter happens over a meal in a restaurant, Congress will restore the full meal deduction deduction was painted as a “three-martini lunch” abuse of the the check is a business expense that’s 50 percent tax deductible. in order to boost the economy, create jobs tax system; today, the country is in the grip of massive layoffs The restaurant industry, reeling from the consumer-spend- and widespread business failures from the recession. And as res- ing slump, is lobbying Congress to restore the full meal and taurant meals have declined during the downturn, thousands of entertainment tax deduction, which was cut during the 1986 tax low-wage workers have been laid off. law overhaul from 100 percent to 50 percent. Whether or not Congress sides with the restaurant industry, A bill in Congress would raise the deduction to 80 percent the 50 percent deduction is the law right now. And taxpayers who as a first step; the National Restaurant Association said this could take advantage of it must keep good records to show the IRS in boost restaurant revenue by $6 billion a year, pumping $18 billion the event they are audited, said alex Serrano, a partner at the into the economy. Springfield accounting firm Citrin Cooperman. Francis Schott, co-owner of the Stage left restaurant in “You need to maintain a contemporaneous record in a diary, New Brunswick, said restoring the 100 percent meal deduction along with your receipts,” he said. “In your diary, you need a sen- is a matter of simple justice, since nearly every other business tence or two as to what business was discussed.” And don’t wait until expense — travel, hotels, gifts for clients — is fully deductible. the end of the year and try to reconstruct your diary, he said. Restaurants are labor intensive, meaning they create jobs Association, said her industry has waged a losing battle to restore Businesses are slashing expenses to survive the recession, but when revenue rises, he said. Stage Left closes for lunch Monday the deduction ever since it was slashed more than two decades ago. they are still doing deals over meals, Serrano said, as “it’s always a to Thursday, but if the full tax deduction is restored, “the next So why should this year be any different? good idea to stay in touch with customers and develop business.” day, I will open for lunch all week, and I would have to hire “The reason we are optimistic is related to current tax policy Martin Stein, president of the New Jersey Society of Enrolled people in order to do it,” Schott said. and attitudes in Washington,” Dowdell said. “Congress is looking Agents, said the Internal Revenue Service watches for high levels of deborah dowdell, president of the New Jersey Restaurant for a way to stimulate the economy, and this is a targeted policy ➤➤ See DINE on page 22 www.njbiz.com njbiz u October 26, 2009 19
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