Moss v. Commissioner, 758 F.2d 211 (7th Cir. 1985)
Moss v. Commissioner is a staple case in federal income tax teaching because it draws a bright line between deductible business expenses under IRC §162 and nondeductible personal expenses under IRC §262 in the context of meals.
Whether the cost of regular, local working lunches attended by law firm partners to discuss firm business is deductible as an ordinary and necessary business expense under IRC §162, or is a nondeductible personal expense under IRC §262 (and, if relevant, disallowed by IRC §274).
Under IRC §162(a), a taxpayer may deduct all the ordinary and necessary expenses paid or incurred in carrying on a trade or business. However, IRC §262 disallows deductions for personal, living, or family expenses. The cost of meals is generally a personal expense and therefore nondeductible unless it falls within a specific exception (e.g., meals while traveling away from home in pursuit of a trade or business or properly substantiated client business meals qualifying under IRC §274). Business discussions during a meal do not, by themselves, convert a personal meal into a deductible expense. Courts adopt a bright-line approach to local meals: routine, non-travel meals consumed near the taxpayer's principal place of business remain nondeductible personal consumption, and taxpayers may not deduct merely the "excess" cost of a business meal over what they would otherwise have spent for food.
The expenses of the law firm's regular intra-firm working lunches were nondeductible personal expenses under IRC §262 and were not deductible under IRC §162. The court rejected the partners' attempt to deduct either the full cost or the excess over a notional personal lunch cost.
Moss is a leading case on the personal-versus-business characterization of meals and illustrates how §262 can override a colorable §162 business-purpose argument. It is frequently used to teach bright-line rules and administrability in tax law, cautioning that routine local meals remain nondeductible even if peppered with business discussion. The case also signals that courts will not entertain 'incremental cost' workarounds for personal consumption and frames how §§ 162, 262, and 274 interact. For practitioners and students, Moss underscores the limited contexts in which meals are deductible (travel away from home; properly substantiated client-business meals) and the importance of clear statutory authorization before claiming deductions that overlap with personal living expenses.