You used to be able to deduct costs of both business meals and entertainment meals with clients. Now, the entertainment costs are no longer deductible. To qualify for the enhanced deduction on business meals, the business owner or an employee of the business must be present when food or beverages are provided, meals must be from restaurants, and the expense cannot be lavish or extravagant.

Business owners should know that the cost of the meal can include taxes and tips, and the cost of transportation to and from the meal isn't part of the cost of a business meal. Entertainment costs are no long deductible, however business owners may deduct the costs of meals during an entertainment event, if the purchase of the meals occurs separately from the entertainment, as well as the cost of the meals is separate from the cost of the entertainment.