Boston Bruins can deduct 100% of cost of certain pregame meals

By Brian Jacobson, J.D., Chicago

Editor: Mark Heroux, J.D.

On June 26, 2017, the U.S. Tax Court held in Jacobs, 148 T.C. No. 24 (2017), that 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 therefore 100% of the costs of the meals may be deducted.

The case stems from 2009 and 2010 tax liabilities that the IRS assessed against Jeremy and Margaret Jacobs, who owned the Boston Bruins through three passthrough entities. The IRS assessed the Jacobses $85,028 in taxes, arguing that the team had wrongly deducted 100% of the cost of meals provided to Bruins players and personnel before away games at the team hotels. The IRS contended that the meals were subject to the 50% limitation under Sec. 274(n)(1). The Bruins argued that under Sec. 274(n)(2)(B), the costs of the meals were excepted from the limitation because they were a Sec. 132(e) de minimis fringe.


Generally, under Sec. 274(n)(1)(A), a taxpayer can deduct only 50% of the cost of any food and beverages that otherwise qualify as an ordinary and necessary business expense. However, there are a number of exceptions to this rule. Under Sec. 274(n)(2)(B), meals that qualify as a de minimis fringe benefit under Sec. 132(e) are fully deductible.

Under Sec. 132(e) and Regs. Sec. 1.132-7, the meals provided by an employer to employees constitute a de minimis fringe if the meals are provided at an employer-owned or leased eating facility in a nondiscriminatory manner and:

  • 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; and
  • The annual revenue derived from the facility normally equals or exceeds the direct operating costs of the facility (the revenue/operating cost test).

Regs. Sec. 1.132-7(a)(2) provides that an employer-operated eating facility satisfies the revenue/operating cost test if the employer can reasonably determine that the meals are excludable to the recipient employees under Sec. 119. Under Sec. 119(a), meals are excludable to recipient employees under Sec. 119 if they are (1) furnished for the convenience of the employer and (2) furnished on the business premises of the employer. Under Regs. Sec. 1.119-1(a)(2)(i), they are furnished for the convenience of the employer if they are furnished for a substantial business reason.

Tax Court holding

After considering the facts and circumstances, the Tax Court found that the costs of the meals for the Bruins players and personnel at the hotels the team stayed at for away games met all of the applicable criteria and were a de minimis fringe benefit that was deductible in full. Notably, the court found that the taxpayer had a substantial business reason for providing the meals (and thus they were furnished for the Bruins convenience) first and foremost because the team had valid nutritional and performance reasons for providing the meals. In addition, the court took an expansive view of when temporary out-of-town work premises could qualify as an employer's business premises for purposes of treating meals as a de minimis fringe benefit.


Predictably, Jacobs received considerable attention because a high-profile sports franchise was involved. However, the implications of this decision are of great interest to many employers throughout the business world.

Jacobs extends the scope of the Sec. 119 exclusion to meals further than the IRS's current view. The decision opens the door for employers to argue that nutritious employer-provided meals will increase employees' work productivity and are therefore beneficial to the employer. Furthermore, employers will now be able to push the boundaries on which meals away from the main workplace can be deducted, if they can show that the facility where the meals are provided is a "temporary work premises."

Many Silicon Valley firms already take advantage of the 100% deduction rule by providing in-house cafeterias and fully deducting the cost of the food. With Jacobs, employers now have strong authority to deduct 100% of meal expenses for traveling employees in certain situations.

For more on this case, see this month's Tax Trends.


Mark Heroux is a principal with the National Tax Services Group at Baker Tilly Virchow Krause LLP in Chicago.

For additional information about these items, contact Mr. Heroux at 312-729-8005 or

Unless otherwise noted, contributors are members of or associated with Baker Tilly Virchow Krause LLP.

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