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Boston Bruins on Thin Ice Over Meals
Posted on September 14th, 2015 in Uncategorized

Boston Bruins on Thin Ice Over Meals

The Boston Bruins hockey team is appealing the IRS’s decision that expenses taken by the hockey team for pre-game meals for the players and staff while traveling for games are subject to the 50% limitation rule.

As background, usually the IRS limits tax deductions for meals to 50% of the cost, (Section 274(n)(1)). But there could be an exception to the 50% limitation if the expense was classified as a de minimis fringe benefit, (Section 132). Specifically Section 132(e)(2) defines meals provided to employees for a substantial non-compensatory business reason, available to all employees and at a employers facility to be a de minimis expense if the facility is on or near the business, (other rules apply but are not applicable to this case).

The Bruins contend that:

– When the team travels away to games the entire organization, (owners, staff, players. Medical personal, etc.) book a hotel in that city. The hotel booking includes rooms for the staff and players, meeting rooms, eating facilities and space for physical therapy. Thus the entire organization travels and the hotel becomes the Bruins base of operations / business premises for a period of time.

– There are two mandatory meals at the hotel on the day of the game a breakfast and mid-afternoon pre-game meal. After the meals the players are escorted to the arena for practice / warm-ups.

– The meals are carefully planned to meet nutritional guidelines for professional athletes. The Clubs medical staff arranges a specifically designed menu for the hotel catering staff to prepare. These meals are also made available to the operations staff.

Therefore the Bruins believe the meals should be 100% deducible because the meals are provided for a nutritional purpose, (non-compensatory business reason) are provided at an employer facility, (the hotel) to all employees.

A trial date has not been set.

About the Author – Phillip Zagotti, CPA is the President of Zagotti and Burdette CPA, LLC. He can be reached at pzagotti@znbcpa.com or (832) 800-3347. 


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