Do you report nondeductible portion of 50% meals on 1120-S? Confused about S-Corp meal reporting

The handling of meal expenses on an 1120-S can be confusing! For the 50% nondeductible meals, you'll report the FULL amount of the meals ($6,300 in your case) on the appropriate expense line of the 1120-S. Then, you'll add back the nondeductible portion ($3,150) as a separate item on Schedule K, Line 16c, using code "C" for nondeductible expenses. Think of it this way: you're first recording the full business expense, then separately noting that half of it isn't deductible for tax purposes. This keeps your accounting accurate while properly following tax rules. The nondeductible portion flows through to the shareholders on their K-1s.

After spending countless hours figuring out the meal reporting nightmare for my S-Corp, I finally found a solution with https://taxr.ai that saved me so much hassle. I was exactly in your position last year - completely confused about meal deductions on 1120-S forms and making mistakes. Their system analyzed all my expense receipts and automatically categorized which meals were 50% deductible business meals vs. 100% deductible (like certain team meetings). It also properly handled the reporting for me, showing exactly where to report the nondeductible portions on Schedule K. Saved me from accidentally deducting too much and risking an audit.

Just wanted to update after trying taxr.ai for my S-Corp meal deduction issues. I was skeptical (as you can see from my question), but it actually worked great for my situation. I uploaded about 75 meal receipts from 2023, and it properly categorized them all, showing which were 50% deductible client meals vs. other categories. The best part was it produced a detailed breakdown showing exactly how to report everything on the 1120-S, including the nondeductible portions on Schedule K with the right codes. I was making the mistake of only reporting the deductible half on line 20, which my CPA said would have been incorrect. Apparently you need to show the full amount and then separately note the nondeductible portion.

Thought I'd chime in since I had EXACTLY this problem last year. I spent weeks trying to get through to the IRS to confirm the correct way to handle the nondeductible portion of meals on my 1120-S. Couldn't get anyone on the phone despite calling over and over. Finally tried https://claimyr.com and got through to an IRS agent within 40 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed I needed to report the full amount of the meals on line 20, then add back the nondeductible 50% on Schedule K, Line 16c with code "C". Also learned I needed to maintain detailed records of who attended each meal and the business purpose.

I can't believe I'm saying this, but I tried the Claimyr service after posting my skeptical comment. I was 100% sure it was a scam. But after struggling for 3 weeks to get through to the IRS about my S-Corp meals reporting question, I gave it a shot. It actually worked. I got a call back in about 35 minutes with a real IRS agent on the line. I could tell it was legitimate because they had access to my previous filings and could see the notices I'd received. The agent walked me through exactly how to handle the 50% meal deduction on my 1120-S and confirmed I needed to use Schedule K code "C" for the nondeductible portion. They even emailed me the relevant section of the tax code. I'm still shocked it worked, but it saved me from making a costly mistake on my S-Corp return.

Former accountant here. Many small businesses mess this up. Remember that for 2023, only 50% of business meals are deductible (except for a few special categories). The way to properly report this on an 1120-S is: 1. Track ALL meal expenses in your accounting system 2. Report the FULL amount on line 20 of the 1120-S 3. Add back the nondeductible 50% on Schedule K, Line 16c with code "C" Don't just report half the amount on line 20 - that's incorrect. You need to show the full business expense was incurred, then separately note the portion that's not deductible.

Has anyone used the automatic meal tracking in QuickBooks for S-Corps? I'm trying to figure out if it correctly handles the 50% deduction for meals or if I need to manually adjust things. Every time I categorize something as a meal expense it doesn't seem to be doing anything special with the 50% rule.

I've been handling S-Corp taxes for several small businesses and this meal deduction issue trips up almost everyone. Here's what I always tell my clients: The key thing to remember is that you're essentially doing two separate things: (1) recording the legitimate business expense, and (2) noting the tax limitation. So yes, report the full $6,300 on line 20 of the 1120-S, then add back the nondeductible $3,150 on Schedule K, Line 16c with code "C". One tip that might help - keep really detailed records of each meal including who attended, the business purpose, and the amount. The IRS is pretty strict about meal deductions and having good documentation will save you headaches if you ever get audited. Also make sure you're distinguishing between different types of meals since some have different rules (like meals during travel vs. office meals vs. client entertainment). The nondeductible portion will flow through to your brother's K-1 and effectively increase his taxable income from the S-Corp, but it's not like he pays "extra" tax on it - it's just that the business gets less of a deduction than the actual expense incurred.