Tax Court Decision May Help Businesses Increase Certain Deductions

Congratulations to the Boston Bruins on the recent decision in their favor by the Tax Court! They can now deduct 100% of their away-game meals, rather than the traditional 50%  thanks to the Tax Court’s ruling. This decision will help more than just the Boston Bruins, since it will likely include the same deduction for the Nashville Predators and every other NHL team. Perhaps other professional sports teams (and other companies that do business in multiple locations) will also benefit.

At issue was whether pregame and post-game meals provided by the team at away games should be deductible at 100%, or at just the traditional 50%. After some thorough preparation by the Boston Bruins ownership and their support team and a willingness by the Tax Court to make a taxpayer-friendly decision, the meals are now 100% deductible, given certain conditions are met.

The Conditions are the Following:

• The eating facility is owned or leased by the employer.
• The facility is operated by the employer.
• The facility is located on or near the business premises of the employer.
• The meals furnished at the facility are provided during, or immediately before or after, the employee’s workday.

The Tax Court was satisfied that the conditions were met to the point they were comfortable making a decision in favor of the Bruins.

The AICPA provided more details on the case in a recent article (as did the Wall Street Journal, Forbes, and Fox Business News). While many, and perhaps most, businesses do not require of their team what an NHL or other major-league sports teams might require of their players and traveling staff, there may be some important application of this decision. Gathering business employees from across the country (or the world) may create a similar scenario for other companies.

The willingness of the Tax Court to view this case the way they did is very positive. The Tax Court chose to look at the realities of a business and apply common sense to the interpretation of the regulations.

One key message in this experience is the encouragement to always ask questions. You never know – the results could save you money!