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Respondent determined (and reflected in the notices of
deficiency) that petitioners could not deduct the following
amounts on account of section 274(n):
1987 1988
CHC $23,797 $102,027
Fremont 28,760 77,709
Sam's Town 59,651 171,446
Stardust 97,150 406,002
Total 209,358 757,184
In its petition, CHC alleges that it did not deduct 20 percent of
the cost of the meals for its 1987 taxable year, and that it is
entitled to do so.
OPINION
We must decide whether the meals are a de minimis fringe
benefit for purposes of section 274(n)(2)(B).4 The meals are a
4 Sec. 274(n), which was added to the Code by sec. 142(b) of
the Tax Reform Act of 1986 (TRA), Pub. L. 99-514, 100 Stat. 2085,
2118, provides in relevant part:
(1) In general.--The amount allowable as a
deduction under this chapter for--
(A) any expense for food or beverages, and
* * * * * * *
shall not exceed 80 percent [sec. 13,209(a) of the
Omnibus Budget Reconciliation Act of 1993, Pub. L.
103-66, 107 Stat. 312, 424-425, changed this amount to
50 percent for taxable years beginning after Dec. 31,
1993] of the amount of such expense or item which would
(but for this paragraph) be allowable as a deduction
under this chapter.
(2) Exceptions.--Paragraph (1) shall not apply to
(continued...)
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