This is in response to your letter dated December 4, 1998, requesting information concerning the deductibility as a business expense of amounts paid for food. We hope that the following general information will assist you and your constituents.
Section 162 of the Internal Revenue Code provides, in general, that a deduction is allowed for all ordinary and necessary expenses paid or incurred during the taxable year in conducting a trade or business. Section 262(a) provides that no deduction shall be allowed for personal, living, or family expenses, unless the deduction is expressiy allowed in another section of ihe Code. Expenditures for food, the "fuel" for all human activities, whether or not business related, are considered inherently personal in nature. Therefore, the cost of food generally is not deductible as a trade or business expense unless it is paid or incurred while traveling away from home overnight or, under some circumstances, in connectior with business entertainment.
The courts have consistently agreed with this position. For example, the Board of Tax Appeals in Smith v. Commissioner, 40 B.T.A.1038 (1939), aff'd per curiam, 113 F.2d 114 (2nd Cir. 1940), stated at pages 1038-39:
[T]he cost of the laborer's raiment... the very home which gives us shelter and rest and the food which provides energy, might all... be construed as necessary to the operation of business and to the creation of income. Yet these are the very essence of those "personal" expenses the deductibility of which is expressly denied.
More recently, in Reading v. Commissioner, 70 T.C. 730 (1978), the United States Tax Court denied a deduction for food and other personal expenses that taxpayer had claimed should be allowed as a "cost of doing labor." The Court rejected this argumen as failing "to acknowledge the difference between people and property," and concluded that: "One's living expenses simply cannot be his cost directly in the very item sold, i.e., his labor, no matter how much money he spends to satisfy his human needs and those of his family. Of course we recognize the necessity for expenditures for such items as food, shelter, clothing, and proper health maintenance. They provide both the mental and physical nourishment essential to maintain the body at a level of effectiveness that will permit its labor to be productive.... But the sale of one's labor is not the same creature as the sale of property... " 70 T.C. at pages 733-734. See also, Moss v. Commissioner; 758 F.2d 211 (7th Cir. 1985), which denied as a personal expense a deduction by members of a law firm of the cost of daily luncheon meetings.