BREAKING NEWS – Corporate Transparency Act on Hold
as of Monday, March 3, 2024
On Friday March 1, 2024, the U.S. District Court for the District of Alabama declared the Corporate Transparency Act (CTA) unconstitutional. In the case of National Small Business Association v. Yellen (Case No. 5:22-cv-01448) [1], initiated by the National Small Business United, the challenge was against the CTA’s mandate for small businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
The ruling has the effect of suspending all BOI filing requirements for now, all enforcement actions, and all compliance concerns including questions of “practicing law without a license.” Experts believe the ruling will be appealed, probably to the Supreme Court, so this is a temporary filing requirement suspension until a final appeal is exhausted. Voluntary filing appears to still be allowed if for some reason a client desires to file.
Tax Tip: 100% Business Deduction for Restaurant Food & Beverage in 2021
A special tax rule enables many businesses, including sole proprietors and independent contractors, to take larger meal expense deductions in 2021 than the IRS usually allows. Ordinarily, deductions for food and beverage costs cannot exceed 50% of the actual expense. However, the 2021 rule enables businesses to deduct 100% of the cost of food and beverages from restaurants in certain cases from January 1, 2021 through December 31, 2022.
The provision defines a restaurant as a business that prepares food or beverages for retail customers to consume on-site, pick up, or receive by delivery. This definition excludes most grocery and convenience stores, unless the store contains a separate restaurant or cafe area. In addition, facilities overseen or owned by the employer claiming the deduction, such as a workplace cafeteria, generally do not qualify as restaurants under this rule.
In order for meal expenses to qualify for this special deduction, the following conditions must be met:
- The business owner or an authorized employee is present when the food and/or beverages are provided.
- The expense is paid to a restaurant, based on the definition above.
- The food and beverage costs are not lavish or extravagant for the circumstances.
The activity must also meet all the standard criteria for business meal deductions. Your tax professional can help you determine whether your food and beverage expenses comply with IRS rules, and whether they qualify for a 100% deduction in 2021.