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20 July 2017

Boston Bruins Just ICED THE IRS IN TAX COURT!

Boston Bruins Just ICED THE IRS IN TAX COURT!

The Boston Bruins professional hockey team just won a huge victory, only it wasn’t on the ice rink. Instead, it was in Tax Court. In a recent surprise ruling (see  Jacobs v. IRS, 148 T.C. No. 24), the Tax Court ruled that the owners of the team  may deduct the entire cost of away game pregame meals as a qualifying de minimis fringe benefit.

How substantial is this win? Normally, the Tax Code only allows 50 percent of the cost of such meals be deducted. But by qualifying the meals as a de minimis fringe benefit under Code section 274(n)(2)(B), the Bruins’ owners can save about $40,000 in taxes each year. 

Certainly other professional sports teams and possibly other businesses should take note of this ruling, particularly those who provide meals and lodging to employees as they travel.  To be deductible as a de minimis fringe benefit: (1) the eating facility MUST be owned or leased by the employer, (2) the facility is operated by the employer, (3) the facility is located on or near the business premises of the employer, (4) the meals furnished at the facility are provided during the workday, and (5) the annual revenue derived from the facility normally equals or exceeds the direct operating costs. Basically, the court found that the hotel became the business premises for the Bruins and thus qualified for both a 100% business deduction and a de minimis fringe benefit for the traveling employees (and not taxable).

If any of these details ring true for your own business, contact us to find out if you’re taking full advantage of fringe benefit deductions.

Image Copyright: yuran-78 / 123RF Stock Photo

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