Thursday, June 29, 2017
Following up on my previous post, Tax Court Petition: Can Boston Bruins (And Other Pro Sports Teams) Deduct 100% Of Meal Expenses At Away Games; Is Hotel A Team's 'Business Premises'?: Journal of Accountancy, Boston Bruins Can Deduct Full Cost of Meals for Team’s Away Games:
Pregame meals provided to Boston Bruins players and personnel before away games qualify as a de minimis fringe benefit under Sec. 274(n)(2)(B) and are not subject to the 50% limitation under Sec. 274(n)(1), the Tax Court held (Jacobs, 148 T.C. No. 24 (6/26/17)). The petitioners, Jeremy and Margaret Jacobs, co-own the Boston Bruins National Hockey League (NHL) team through two S corporations. The IRS had disallowed 50% of the Bruins’ deduction for expenses for meals provided to the Bruins’ employees when traveling to away games, which resulted in deficiencies of $45,205 and $39,823 in the Jacobses’ 2009 and 2010 federal income taxes.
The court explained that the NHL requires its teams to play half of their yearly games away from home and has detailed rules governing travel to those games, and the rules in the league’s collective bargaining agreement require that the teams must arrive the night before when traveling to a game’s location entails a plane trip of longer than 150 minutes. NHL teams keep all of the ticket sales from their home games and none from away games; furthermore, they incur various penalties if they do not attend an away game.
To accommodate this schedule, the Bruins contract with hotels for lodging and food in cities where the team plays away games. Under these arrangements, the hotels provide banquet or meal rooms where pregame meals and snacks are served. These meal facilities are open to all traveling staff, but players’ attendance is mandatory (players are required to attend breakfast and lunch when they have a night game, or brunch when they play an afternoon game). The Bruins order the same type of food whenever the team is away to avoid causing players upset stomachs and also order food that meets players’ specific nutritional requirements.