Boston Bruins Battle IRS Over Meal Deductions

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The Boston Bruins hockey team is taking the Internal Revenue Service to court over its habit of deducting 100 percent of the cost of away-game meals.

Employers may generally deduct up to 50 percent of the cost of meals for employees. An exception is if the meals are furnished for the convenience of the employer and on the employer’s business premises, in which case the employer may deduct 100 percent of the cost.

Boston Bruins owner Jeremy Jacobs filed a petition in the Tax Court on July 27 disputing the 50 percent limitation on the meals provided Bruins players in their away games during the years 2009 and 2010. The Bruins practice of taking 100 percent of deductions for team meals during road trips was similar to the exception for employer-operated eating facilities, the petition maintained, since the hotels at which the team meals were consumed constituted its “base of operations” during away games.

“Use of the away city hotel is extensive, requiring that the hotel provide rooms for each player and staff member, private meeting rooms, eating facilities, and space for physical therapy and medical treatment,” Jacobs contended in the petition filed with the Tax Court.

Moreover, according to the petition, “The away city hotel is the club’s business premises during the club’s travels in the away city.”

It cited the fact that the purpose of the hotel stay “is all business.” For example, players are required to sleep at the designated hotel and abide by a designated curfew, and  the coaches and staff conduct business meetings at the hotel. In fact, the petition said, “The time spent at the away city hotel is substantial, and far greater than the 60 minutes of ice time that each away game requires.”

Naturally, the case will be closely followed by the rest of the National Hockey League and other professional sports teams.

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Tax practice