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provided in a facility that normally makes an overall profit, and
that the Congress did not intend for section 274(n)(2)(B) to
apply to meals covered by section 119. Respondent relies
primarily on two excerpts from the committee reports to section
274(n)(1). The first excerpt states that “20 percent of an
otherwise allowable deduction for food and beverages * * * is
disallowed. Similarly, the cost of a meal furnished by an
employer to employees on the employer’s premises is subject to
the rule.” S. Rept. 99-313, at 70 (1985), 1986-3 C.B. (Vol. 3)
1, 70; H. Rept. 99-426, at 123 (1985), 1986-3 C.B. (Vol. 2) 1,
123. The second excerpt states that “The bill generally reduces
to 80 percent the amount of any deduction otherwise allowable for
meal expenses, including meals * * * furnished on an employer’s
premises to its employees (whether or not such meals are
excludable from the employee’s gross income under sec. 119).”
H. Conf. Rept. 99-841, at II-24 to II-25 (1986), 1986-3 C.B.
(Vol. 4) 1, 24-25. Respondent also relies on the fact that
section 274(e)(1) refers to food and beverages furnished on an
employer’s business premises primarily for its employees.
Respondent argues that section 274(n)(2) would have referred to
section 274(e)(1), had the Congress intended to except employee
meals from the limitation of section 274(n)(1).
We disagree with respondent’s broad reading of section
274(n)(1). In support of her reading, respondent refers us to
two excerpts of legislative history. Respondent takes both
excerpts out of their context. The first excerpt is listed under
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