Boston Bruins court victory could signal a path to additional tax savings for teams
A recently-won dispute with the IRS means that the Boston Bruins can keep more of their revenue, and it’s a process that other college and professional sports teams could easily copy.
A tax court ruled that meals provided by the Boston Bruins for players and staff on road trips were fully deductible and tax-free for the recipients. If the ruling becomes precedent, it could mean that other similar organizations could pay less in taxes going forward.
According to Laura Saunders of The Wall Street Journal, the Bruins and the IRS were at odds over the deduction of meals provided to players in staff on road trips in 2009 and 2010. The total of the deductions came to over $250,000 in both years. The IRS had rebuffed the Bruins’ attempt to deduct the full value of the meals, stating that only half of the cost of the meals was deductible, and demanding an additional $85,000 from the Bruins.
The IRS can appeal the decision, and even this ruling doesn’t provide all the clarity that organizations like the Bruins would like. Tax law for businesses can be even more complicated and subjective in its enforcement than individual tax law. Additionally, the various regulations can be changed at anytime by Congress. Despite that, the potential savings might be worth the risk for college and professional sports teams.
Under current legislation as currently applied, the key phrase is “for the convenience of the employer.” The Bruins used that clause to their advantage, arguing that the meals provided by the team at the team hotels on these trips centered around convenience for the Bruins. That’s a model that other teams should be able to replicate easily.
In simple theory, other teams in the NHL and other similar leagues could now have meals catered for their personnel at team hotels on road trips, keep the receipts and write off every dollar spent on those meals when filing taxes. It’s possible that the IRS might challenge those deductions, but teams to attempt this in the future will now have a precedent to argue if they should face the IRS in tax court.
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If that precedent turns into common practice, operating a college or professional sports team may have just gotten less expensive.