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the caption “in general”. Immediately thereafter, under the
caption “Exceptions to percentage reduction rule”, the reports
state that “The bill provides certain exceptions to the
applicability of the percentage reduction rule. First, the cost
of a meal * * * is fully deductible if the full value * * * is
excludable under section 132, pursuant to either the subsidized
eating facility exclusion or the exclusion for de minimis fringe
benefits.” S. Rept. 99-313, supra at 71, 1986-3 C.B. (Vol. 3)
at 71; H. Rept. 99-426, supra at 124, 1986-3 C.B. (Vol. 2) at
124. The same is true with respect to the second excerpt.
Reading on from the language to which respondent has referred us,
we find that the report goes on to discuss the same two
exceptions that respondent would have us ignore today. H. Conf.
Rept. 99-841, supra at II-25, 1986-3 C.B. (Vol. 4) at 25.
Based on our reading of all the legislative history, we find
that the excerpts on which respondent relies do not stand for the
broad proposition that she espouses. The excerpts are merely
broad rules that are limited by language that follows immediately
thereafter. Unlike respondent, we do not read the legislative
history to foreclose the complete deduction of employee meals in
100 percent of the cases.11 Petitioners’ deduction for their
employee meals would not be limited by section 274(n)(1), for
example, if section 119 allows all of petitioners’ employees to
exclude the value of the meals from their gross income. In such
11 We also place less weight than respondent on the fact
that the Congress did not include sec. 274(e)(1) in its list of
exceptions under sec. 274(n)(2).
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