The Boston Bruins made history recently, but not on the ice. The Tax Court recently ruled in favor of the team as they argued with the Internal Revenue Service that the meals provided to its players at hotels while playing “away games” should qualify as non-taxable fringe benefits.
The tax code allows for an employer to provide its employees with meals on its premises while the employee is working (or directly before or after working) and exclude the cost of those meals from the employee’s taxable income. Furthermore, the cost of these meals would then be 100% deductible for the employer and not subject to the 50% meals and entertainment limit.
The Bruins argued that the meals provided at the team hotels before or after the games should qualify for these exemptions. The Tax Court held for the team and agreed that since the hotels were rented by the team, they met the test of being on the employer’s premises. The meals were provided during a required pre-game or post-game meeting and, therefore, also met the test of being during working times.
So how does this benefit the average owner or employee? This case may open up the door for legitimate deductibility for 100% tax deductions for employer’s providing meals to employees wherever they may be located. In today’s global environment that could mean a lot. If your workforce travels, say in the construction arena, and you provide employees meals while away from home, you may now be able to take 100% deduction on some or all of those costs provided you meet the other requirements. The door seems to be open for employers to get a full tax benefit for providing meals to their employees, and not just those in the brick and mortar corporate headquarters building.
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Article by: Brad Voght, C.P.A.