20.3 Overnight-Sleep Test Limits Deduction of Meal Costs

The overnight-sleep rule prevents the deduction of meal costs on one-day business trips. To be deductible, meal costs must be incurred while “away from home” and this test requires that they be on a business trip that lasts longer than a regular working day (but not necessarily 24 hours) and requires time off to sleep (not just to eat or rest) before returning home. Meal costs while away from home are subject to the 50% deduction limit (20.17). Taking a nap in a parked car off the road does not meet the overnight-sleep test.

EXAMPLES
1. A New Yorker flies to Washington, D.C., which is about 250 miles away, to see a client. He arrives at noon, eats lunch, and then visits the client. He flies back to New York that evening. He may deduct the cost of the plane fare, but not the cost of the lunch. He was not away overnight nor was he required to take time out to sleep before returning home.
2. Same facts as above except he sleeps overnight in a Washington hotel. He eats breakfast there, and then sees another client and returns home to New York in the afternoon. He may deduct not only the cost of the plane fare but also the cost of the meals while on the trip and the cost of the hotel, since he was away overnight.
3. A trucker’s run is from Seattle to Portland and back. He leaves at about 2:00 a.m. and returns to Seattle the same day, getting in at about 6:00 p.m. While in Portland, he is released from duty for about four hours layover time to get necessary sleep before returning to Seattle. He may deduct the cost of meals because he is released at a layover location to obtain necessary sleep. Official release from duty, however, is not a prerequisite for satisfying the sleep or rest test.

Several courts held that the IRS rule was unreasonable and outdated in the world of supersonic travel, and they would have allowed the New Yorker on the one-day trip to Washington, D.C., to deduct the cost of his lunch. The Supreme Court disagreed and upheld the IRS rule as a fair administrative approach.

Meal costs during overtime.

Such costs are not deductible if you are not away from your place of business. Thus, for example, a resident physician could not deduct the cost of meals and sleeping quarters at the hospital during overnight or weekend duty.

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