IRS Acquiesces in Result Only in Hockey Team Meals Case

Although the case arguably has been rendered effectively moot by the Tax Cuts and Jobs Act, the IRS did announce in Action on Decision AOD 2019-01 that it acquiesced in result only in the case of Jacobs v. Commissioner, 148 T.C. No. 24 (2017).

The Jacobs case, which we detailed when the case was originally released (Full Deduction Allowed to Hockey Team for Meals Provided to Players at Away Games, 6/20/17), held that a profession hockey team that provided meals for its players in areas leased from local hotels for away games qualified as meals provided at an employer’s eating facility under §132(e).  Based on the law in effect that time, such employer meals provided at an employer’s eating facility qualified for a 100% deduction for the employer and no inclusion in income for the employee.

The Tax Cuts and Jobs Act moved to phase-out this deduction, providing for only a 50% allowance for years beginning after 2017 and reduced to 0% for amounts paid after December 31. 2025.[1]

As the AOD notes, an “acquiescence in result only” means:

Both “acquiescence” and “acquiescence in result only” mean that the Service accepts the holding of the court in a case and that the Service will follow it in disposing of cases with the same controlling facts. However, “acquiescence” indicates neither approval nor disapproval of the reasons assigned by the court for its conclusions; whereas, “acquiescence in result only” indicates disagreement or concern with some or all of those reasons.

Specifically, the IRS outlines the agency’s position on this case as follows:

Acquiescence in result only as to whether a professional hockey team's expenses for providing pregame meals at away city hotels were fully deductible because they were provided at employer-operated facilities.

Unfortunately, this is as much guidance as the IRS gives regarding what parts of the reasoning of the opinion the agency disagrees with.  The AOD does serve as a caution to taxpayers and advisers that the agency is likely to challenge attempts to expand upon this ruling to cover other situations.

[1] IRC §274(o) as amended by the Tax Cuts and Jobs Act of 2017