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Offseason victory: Bruins prevail over IRS in meal deduction faceoff

The Red Sox are in first place, but the Bruins also scored a victory this week, even though it's their offseason.

The Bruins' win was not on the ice, but in U.S. Tax Court over the IRS, in a case involving the deductibility of team meal expenses.

The case dates back to tax years 2009 and 2010, when the Bruins fully deducted the cost of team meals that players were required to attend during road trips. The IRS disallowed half of that deduction. But the Tax Court held for the Bruins, not the IRS.

As we discussed in an earlier post, the general rule is that employers only get to deduct half of the cost of meals provided to employees. The Bruins argued, however, that road-trip meals should be deductible as de minimis fringe benefits because they were only nutritional but strategic.

The meals were strategic in that they involved developing a game plan for each road contest, as well as creating a connection point between the players and the team's media relations staff.

The sticky legal question, though, was whether the team hotel during road trip should be considered to be the team's place of business. For home games, there was no question that the team's place of business was its home arena, TD Gardens.

The Tax Court, in its decision, agreed that the team hotel served as the place of business for road games.

The case was not a high dollar one. The amounts involved in the tax deficiency that the IRS alleged were a bit over $45,000 for 2009 and a bit under $40,000 for 2010.

The principle of taking allowable deductions, however, is important, regardless of the amount.

And on the specific issue of meal deductibility, it is possible the issue may arise in other contexts, away from sports, for employees working together on the road. By taking on the Bruins over this issue, and losing, and IRS may have undercut its ability to win similar faceoffs in the future.

 

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