Lunches may or may not be part of an employee's salary

In 1938 the Supreme Court said, “Every deduction from gross income is allowed as a matter of legislative grace ... and a taxpayer seeking a deduction must be able to point to an applicable statute and show that he comes within its terms.”

This tends to be shortened to deductions are a matter of legislative grace. Grace is delivered by Congress.

Our opinion does not matter. The tax law is divided between definitions of income and of deductions. I include exclusions in the deduction category.

Sections 61 through 88 tell us what income is. Sections 101 through 139 tell us what income is not.

Section 61 starts broadly. Income is said to be income from “whatever source derived.”

Income can also be thought of as an economic benefit. If something conveys a measurable benefit to us, it is generally income.

But remember those exclusions. Section 102 says gifts and inheritances are not income. Section 112 says the same for active-duty combat zone pay.

Section 119 excludes the value of meals provided on an employer’s business premises if provided for the convenience of the employer.

So, as an example, a rural hospital could provide on-site meals to emergency room medical staff. This keeps the staff on site for emergencies.

What about meals provided to the football team and staff of the Washington Commanders NFL team?

The Commanders practice in Ashburn, Virginia. They have an on-site dining facility with a 15-person culinary team.

The dining hall serves breakfast, lunch and dinner to 225 players, coaches and staff.

The culinary staff is trained at the same places that staff Michelin star restaurants. They say they offer the same meals provided in a high-end restaurant.

Breakfast is available before 9 a.m. team meetings. Lunches are served before team practice.

Lunch is the biggest meal. It typically uses 60 to 80 pounds of meat and 25 to 45 pounds of vegetables.

The heaviest meals are offered the day after the game. This is to help players recover from the physical rigors of the game.

The culinary team says the output doubles during training camp. There are roughly twice as many players invited to training camp.

To be excluded from the income of these 225 people, the requirements of Section 119 of the tax law must be satisfied.

Ashburn is about 30 miles from Washington. It is 10 miles northwest of Dulles International Airport, which is the suburban airport serving the district.

Players, coaches and staff really can’t leave the facility to eat their meals. Well, they can, but it would not be conducive to a well-run football organization.

The Washington Commanders have developed a reputation for not being a well-run football organization.

Could the IRS say that the meals are not for the convenience of the employer because the team is known for being poorly run?

You can say anything. But that’s a weak argument. In fact, the team has received some recent praise for stepping up its game, so to speak.

The results are reflected on the field. The NFL is a big-time operation. There’s a lot on the line given the value of these franchises.

The Commanders, and every other NFL team, need a controlled practice facility. This includes players, coaches and staff that are not coming and going at will.

But what about you? I’m going to assume that you are not an active NFL player or coach.

Can your employer pay for your meals without including the value in your income? Maybe (see rural hospital ER staff above).

But in most cases, no. There is no employer benefit in keeping you on site to eat all your meals.

What if it’s just an occasional meal? A dinner when the staff works late. A lunch to reward everyone for completing a major assignment.

That type of meal can be tax-free as a “de minimis” fringe under Section 132. This means the value is so small that it is unreasonable to expect the employer to account for it.

De minimis must consider how often the benefit is offered. So weekly lunches will not work. But a de minimis meal can even be off the employer’s premises.

The trick to a tax benefit is to point to a statute and to show that you come within its terms. Then receive that legislative grace.