UNITED STATES TAX COURT

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T.C. Memo. 1997-445

UNITED STATES TAX COURT

BOYD GAMING CORPORATION, F.K.A. THE BOYD GROUP

AND SUBSIDIARIES, Petitioners v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

CALIFORNIA HOTEL & CASINO AND SUBSIDIARIES, Petitioners

v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket Nos. 3433-95, 3434-95.

Filed September 30, 1997.

Ps provide free meals to their employees in

private cafeterias located on Ps' business premises.

R determined that sec. 274(n)(1), I.R.C., limits Ps’

deduction for the cost of these meals. Ps argue that

they may deduct 100 percent of their costs under the de

minimis fringe benefit exception of sec. 274(n)(2)(B),

I.R.C., which requires in this case that Ps provide the

meals to each of substantially all of their employees

for a substantial noncompensatory business reason.

Held: Ps' deduction is limited by sec. 274(n)(1),

I.R.C.; the de minimis fringe benefit exception of sec.

274(n)(2)(B), I.R.C., is inapplicable under the facts

herein because Ps do not provide the meals to each of

substantially all of their employees for a substantial

noncompensatory business reason.

- 2 Thomas P. Marinis, Jr., J. Barclay Collins III,

Sarah A. Duckers, and Charles L. Almond, for petitioners.

Paul L. Dixon and Barbara S. Trethewy, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

LARO, Judge:

The docketed cases are before the Court

consolidated for purposes of trial, briefing, and opinion.

California Hotel & Casino (CHC) petitioned the Court to

redetermine respondent's determination of deficiencies of

$81,761, $14,428, and $42,124 in its consolidated group's 1982,

1984, and 1987 Federal income tax, respectively.

Boyd Gaming

Corp. (Boyd) petitioned the Court to redetermine respondent's

determination of a $152,346 deficiency in its consolidated

group's 1988 Federal income tax.

Following concessions by the parties, we must decide whether

petitioners' deductions for food and beverages provided to their

employees without charge on petitioners' business premises are

limited by section 274(n)(1).

In Boyd Gaming Corp. v.

Commissioner, 106 T.C. 343, 344, 349 (1996), we held in summary

adjudication that section 274(n)(1) does not limit petitioners'

deductions if the food and beverages are a de minimis fringe

benefit under section 274(n)(2), which, in turn, requires that

petitioners provide the food and beverages to each of

substantially all of their employees for the "convenience of the

- 3 employer" under section 119.1

We hold herein that petitioners do

not provide the food and beverages to each of substantially all

of their employees for the convenience of the employer, and,

hence, that petitioners' deductions are limited by section

274(n)(1) because the food and beverages are not a de minimis

fringe benefit under section 274(n)(2)(B).

Unless otherwise

stated, section references are to the Internal Revenue Code in

effect for the years in issue.

Rule references are to the Tax

Court Rules of Practice and Procedure.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

The stipulated facts and the exhibits submitted therewith are

incorporated herein by this reference.

The record consists

mainly of these stipulated facts and exhibits and the testimony

of numerous witnesses, all of whom were called by petitioners.

Petitioners' primary witnesses were:

(1) Robert Boughner,

petitioners' executive vice president during the subject years,

(2) John Repetti, CHC's casino manager during the subject years,

(3) Steve Thompson, the general manager of Fremont Hotel & Casino

(Fremont) during the subject years, (4) Bruce Fraser, the

assistant general manager of Sam’s Town Hotel & Gambling Hall

The President recently signed into law the Taxpayer Relief

Act of 1997 (the 1997 Act), Pub. L. 105-23, 111 Stat. 788.

Sec. 970 of the 1997 Act, 111 Stat. 897, effective for taxable

years beginning after Dec. 31, 1997, amended sec. 132(e)(2) so

that the cost of a meal provided to an employee for the

convenience of the employer may be deducted in full. This

amendment parallels the Court's holding in Boyd Gaming Corp. v.

Commissioner, 106 T.C. 343, 344, 349 (1996).

- 4 (Sam’s Town) during the subject years, (5) John Miner, who joined

the Stardust Hotel & Casino (Stardust) in July 1988 and served as

its general manager throughout the remainder of the subject

period, and (6) Mary Ann Burns, who joined the Stardust in

October 1988 and served as its director of hotel operations

throughout the remainder of the subject period.

CHC and Boyd are Nevada corporations whose principal offices

were in Las Vegas, Nevada, when they petitioned the Court.

For

its taxable year ended June 30, 1988 (the 1987 taxable year),

CHC was the parent of an affiliated group of corporations that

filed a consolidated Federal income tax return.

group included:

CHC's affiliated

(1) Sam-Will, Inc., doing business as Fremont,

and (2) Mare-Bear, Inc., doing business as Stardust.

did business as Sam’s Town.

CHC also

By virtue of a reorganization of the

group, Boyd became the parent of the affiliated group beginning

with the 1988 taxable year.

Boyd's affiliated group included:

(1) CHC, which sometimes did business as Sam’s Town,

(2) Sam-Will, Inc., doing business as Fremont, and (3) Mare-Bear,

Inc., doing business as Stardust.

Petitioners operate CHC, Fremont, Sam's Town, and Stardust

(collectively, the Properties).

Each of the Properties is a

large resort or hotel complex located in Las Vegas, Nevada.

and Fremont are located downtown.

CHC

Stardust is located a "stone's

throw" away from CHC and Fremont, in an area commonly known as

"the Strip".

Sam's Town is located approximately 6 miles from

the Strip and approximately 6 miles from downtown.

- 5 Each of the Properties has casino, restaurant, and hotel

facilities; the hotel rooms tend to run at close to full

occupancy, and the hotel guests tend to "turn over" weekly.

Some of the Properties also have convention and/or entertainment

facilities.

As of June 30, 1989, CHC had 635 hotel rooms,

222 R.V. parking spaces, four restaurants, two lounges, 35 gaming

tables, 81 keno seats, 18 race and sports book seats, and

970 slot machines.

Fremont had 450 hotel rooms, five

restaurants, one lounge, 48 gaming tables, 58 keno seats, 142

race and sports book seats, and 952 slot machines.

Stardust had

1,367 hotel rooms, 370 R.V. parking spaces, six restaurants, one

showroom, one lounge, 84 gaming tables, 105 keno seats, 300 race

and sports book seats, and 1,324 slot machines.

Sam's Town had

204 hotel rooms, 508 R.V. parking spaces, eight restaurants, one

lounge, 57 gaming tables, 166 keno seats, 193 race and sports

book seats, and 1,892 slot machines.

Sam's Town also had a 56-

lane bowling alley and a 25,000-square-foot retail area called

the Western Emporium.

Each of the Properties is located in a heavily populated

area of Las Vegas near numerous eating facilities, including fast

food restaurants, competitor casino restaurants, ethnic

restaurants, sandwich shops, pizza houses, food courts, and

convenience stores.

24 hours a day.

Many of these eating facilities serve meals

The aggregate seating capacity of the eating

facilities, exclusive of the casino restaurants, near Stardust

and Sam's Town is in both cases more than 1,100 diners.

The

- 6 aggregate seating capacity of the eating facilities, exclusive of

the casino restaurants, near CHC and Fremont is in both cases

more than 650 diners.

The record does not disclose the seating

capacity of the casino restaurants near CHC, Fremont, Stardust,

or Sam's Town.

CHC and Fremont have 11 competitor casinos

situated nearby, and these competitors house numerous restaurants

offering an assortment of meals including fast food, ethnic food,

buffet food, sandwiches, and pizza.

The same assortment of

restaurants is present in the 11 competitor casinos located near

Stardust.

Sam's Town has two competitor casinos nearby, one of

which has a pasta buffet, a cafeteria, and a delicatessen.

Most of the major casinos in Las Vegas provide meals to

their employees at no charge in private eating facilities located

on the casinos' premises.

In order to attract and keep

employees, petitioners offer compensation and benefits packages

to their employees that are highly competitive with those of

other similar employers.

Included in these packages is the

benefit of a meal or meals during, and/or in some cases before or

after, an employee's shift.

Petitioners opted before the subject

years to provide meals to all of their employees after it was

decided, by the management of the affiliated group's parent, that

petitioners would generally require their employees to stay on

the premises throughout their shifts and that it was unreasonable

to require full-time employees to stay on the premises for an

8-hour shift without offering them meals.

Management believed

that it was essential to petitioners' operations that 75 to 80

- 7 percent of their employees (by name and not by number) stay on

the premises throughout their shifts, and that these employees

deserved meals for having to stay on the premises.

Management

also believed that it was not essential to petitioners' operation

to keep the remaining 20 to 25 percent of the employees on the

premises throughout their shifts, but petitioners would generally

require these employees to stay on the premises, and offer them

meals, as a matter of consistency.

The meals that petitioners

provide to their employees include hot meals, cold foods, and

snacks (collectively referred to as the meals).

Petitioners

provide the meals to their employees as a form of compensation,

and petitioners’ provision of the meals is not discriminatory in

favor of highly compensated employees.

Petitioners provide the meals to the employees at each

Property in a private employee cafeteria (the Cafeteria) that is

located on the Property's premises.

Each of the Properties owns

and operates its Cafeteria, and each Cafeteria is separate from

the public restaurants located on the Properties, which, in turn,

are separate from the alcohol bars on the premises.

Employees

receive the meals without charge, and it is petitioners' policy

to provide the meals in the Cafeterias only to employees.

Petitioners occasionally serve in the Cafeterias the surplus food

from their banquets or buffets.

Petitioners do not quantify the

amount of surplus food consumed in the Cafeterias, and they do

not accurately account for any of the food served in the

Cafeterias.

Petitioners keep no records that identify how many

- 8 meals are served in the Cafeterias, who eats in the Cafeterias,

how many times an employee eats in the Cafeterias, or on what day

an employee eats in the Cafeterias.

Petitioners keep no records

that show that an employee eats in the Cafeteria only on the days

that he or she works.

Petitioners' employees do not have to eat

the meals served in the Cafeterias.

Petitioners' employees may

eat, in or outside of the Cafeterias, food brought onto the

Properties.

The Cafeterias seat approximately the following number of

people:

Cafeteria at CHC

Cafeteria at Fremont

Cafeteria at Sam's Town

Cafeteria at Stardust

65-90

200-250

160-180

Each of the Cafeterias is open 7 days a week, 24 hours per day,

except when closed for cleaning.

Cleaning occurs once a week on

the graveyard shift (as defined below), during which time

employees are allowed to eat in the public restaurants.

addition to the right to eat in the Cafeterias, approximately 10

percent of petitioners' employees (generally management and

supervisory employees) also may eat in the Properties' public

restaurants.

Petitioners do not allow other employees to eat in

these public restaurants while on duty, except when a Cafeteria

is closed for cleaning.

Petitioners keep no records that

identify how many meals are served to employees in the public

restaurants, the employees who actually eat in the public

restaurants, how many times an employee eats in the public

- 9 restaurants, or on what day an employee eats in the public

restaurants.

Petitioners keep no records that show that an

employee who is allowed to eat in the public restaurants eats

there only on the days that he or she works.

It is petitioners' policy that employees may enter the

Cafeterias freely whenever they are open, and that employees need

not sign in at a Cafeteria upon entrance or sign for food when

received.

It is petitioners' policy that employees may not eat

in the Cafeterias on a nonworking day or bring guests to eat in

the Cafeterias at all.

It is petitioners' policy that employees

who violate the policy of the Cafeterias are subject to

dismissal. Petitioners do not formally monitor any of the

policies for the Cafeterias.

Petitioners oversee each employee's

adherence to these policies through an honor system and an

informal policing that is incidental to an employee's presence in

the Cafeteria.

Employees have been disciplined, suspended,

and/or dismissed from employment for violating petitioners'

policies for the Cafeterias.

Petitioners employed the following numbers of people at the

Properties in 1988 and 1989:

CHC

Fremont

Sam's Town

Stardust

1988

1989

1,002

936

1,402

2,251

1,052

878

1,508

2,406

The table below has a breakdown of these employees by Property,

job classification, job code, and job description.

The table

- 10 also lists the number of meals that each employee is entitled to

receive during his or her shift (or whether the employee is

authorized to eat in the public restaurants on the Properties for

a reason other than that the Cafeterias are closed for cleaning),

the minutes that the employee receives for meals and other

breaks, and the number of employees who wear uniforms at work (at

other than Sam's Town).

The record does not indicate which

employees at Sam's Town wear uniforms during work.

An appendix

to petitioners' brief lists the employees at Sam's Town who

petitioners allege wear uniforms.

This appendix, however, is

not evidence, Rule 143(b), and we give no consideration to it.

CHC

JOB

CODE

400A

402

401

303E

167E

300

166E

168E

519

546

285

172E

057

184

101

277E

306

282

253E

281E

314

252E

154E

258

311

313E

431

157E

DESCRIPTION

UNIFORM

ACCT CLK IV

ACCTG CLERK II

ACCTG CLK III

ACT CLK SUPV

ASST CONTROLLER

CHIEF ACCT

CONTROLLER

PAYROLL SUPV

RECEIVER

Yes

STOCK CLERK

Yes

ADMIN CLRK

DIR HUM RES

EMP RELATIONS DEV MGR

EMPL RELATIONS MGR

HR SPCLST

OFFICE MGR

PURC AGENT

SECRETARY

ASST R/S MGR

ASST SLOT MGR

Yes

AST CAG SHFT

Yes

AST CAG/CRED

AST CASINO MGR

AST COIN MGR

Yes

BOXPERSON

Yes

CAG SHFT SUPV

CAGE CASHIER

Yes

CAGE/CRED MGR

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(30)

7(20)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 11 -

JOB

CLASS

Accounting

Administrative

Casino

JOB

CODE

310E

153E

156E

155E

438

195

107

443

442

441

453

452

095E

105

106

465

321

474

473E

562

186E

320E

475

170

517

158E

359

574

317

316

169E

627

315E

538

537

187E

259E

DESCRIPTION

UNIFORM

CASINO FLOOR SUPERVISOR No

CASINO MGR

CASN PIT BOSS

CASN SHFT MGR

CHANGE ATTDT

Yes

COIN RM MGR

Yes

COIN ROOM MAINT

Yes

CREDIT CLERK

Yes

CREDIT CLERK II

CREDIT CLERK III

DEALER 21

Yes

DEALER DICE

Yes

DIR GAMING SCHOOL

GAMING SCH INSTR

GAMING SCHOOL INSTRUCTO No

HRD COUNT ATN

Yes

KENO 2ND

Yes

KENO 3RD

Yes

KENO COMP STA

Yes

KENO HOST

Yes

KENO MGR

KENO SHFT MGR

KENO WRITER

Yes

MASTR SLOT TEC

R/S TELLER

Yes

RACE/SPORTS MANAGER

SLOT AREA SUPV

Yes

SLOT CLUB ATTD

Yes

SLOT FLRPRSN

Yes

SLOT HOST

SLOT MGR

SLOT SERVICE ATTD

Yes

SLOT SHFT MGR

SLOT TECH I

Yes

SLOT TECH II

Yes

SPORTS BK MGR

AST FCLTY MGR

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(30)

2(15)

7(20)

2(15)

- 12 -

JOB

CLASS

Casino

Engineering

1(30)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 13 JOB

CODE

160E

479

491

490

501

605

606

014E

279E

201E

262

558

416

415

165E

428

437

439

455

164E

162E

352E

461

353

425

478

477

480

488

510

509

508

351E

539

354E

541

542

543

DESCRIPTION

FACILITY MGR

LABORER

MAINT ENG HELPER

MAINT ENGINEER

PAINTER

SHOP CARP II

EX VP/GEN MGR

EXEC SECRTY

ASST FD DIRECTOR

AST CHEF

BANQ SERVER

BAR BACK

BARTENDER

BEV MGR

BUS PERSON

CASHIER-FD

COCKTAIL SERV

DINING RM RUN

EXECUTVE CHEF

FD/BEV DIR

FOD SHFT SUP

FOOD SERVER

HOST PERSON

KIT RUNNER

KITCHN HELP

LD KIT HELP

LD LINE COOK

LINE COOK

PREP COOK 1

PREP COOK II

PREP COOK III

RESTAURANT MGR

SNAC BAR ATDN

SOUS CHEF

SPEC BUS PERS

SPEC FD SERVR

SPEC LD LN CK

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(30)

2(15)

1(20)

-13-

JOB

CLASS

Engineering

Executive

Food & Bevera

- 14 -

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

MEAL

JOB

MEAL

BREAK

OTHER

CODE

DESCRIPTION

UNIFORM

1988

1989

CODE1

MINUTES

BREAKS (MINUTES)

CLASS

Food & Bevera

544

SPEC LINE CK

Yes

Hotel

257E

AST EXEC HSKG

Hotel

419

BELL PERSON

Yes

2(10)

Hotel

565

CAR WASHER

Hotel

446

CUSTODIAN I

Yes

Hotel

445

CUSTODIAN II

Yes

2(15)

Hotel

198E

DIR HTL OPRTN

45-60

Hotel

256E

EXECUT HSKPR

Hotel

204

FRONT DESK SUPV

Hotel

575

GARAGE BOOTH ATTD

Yes

Hotel

464

GUEST RM ATND

Yes

2(15)

Hotel

333

GUEST ROOM SUPERVISOR

Yes

2(15)

Hotel

472

HOTEL CLERK I

Hotel

471

HOTEL CLK II

Yes

Hotel

191E

HOTEL MGR

Hotel

481E

LD PARK ATDNT

Yes

2(15)

Hotel

336

LEAD CUSTODIAN

Yes

Hotel

335

LEAD CUSTODIAN

Yes

Hotel

489

LINEN RM ADTN

Yes

Hotel

268

MGR CUST SVC

Hotel

502E

PARKG ATDNT

Yes

2(15)

Hotel

194

PBX MANAGER

Hotel

503

PBX OPERATOR

Hotel

255E

ROOM RESERV MGR

Hotel

525

RV PARK ATTD

Hotel

523

RV PARK CLRK

Hotel

524

RV PARK LD ATTD

Hotel

193

RV PARK MGR

MIS

440A

COMPUTR OPRTR

MIS

304E

D P SUPERV

MIS

534A

SR COMP OPERT

Sales & Market

209E

ADV & PUB MGR

Sales & Market

196E

DIR AD/PB/PRO

Sales & Market

177E

DIR SALES

Sales & Market

339A

GRP SALES MGR

Sales & Market

463A

GRP SALES REP

Sales & Market

512

338

PROMOTIONS ATTD

PUBLICITY/PROMO/ADV ASST No

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

JOB

CLASS

Security

Total

JOB

CODE

261E

159E

532

533

552

331E

548

DESCRIPTION

ASST SECURITY MGR

SECURITY MANAGER

SECURITY DISPATCHER

SECURITY OFF/IN

SECURITY OFFICER-OUT

SECURITY SHFT

SURVEIL AGENT

UNIFORM

Yes

1988

1,002

1989

1,052

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

FREMONT

400A

401A

403

402A

303

167

166E

301

168A

519

300

285

172E

176

057

568

101

306

290

282

ACCT CLK IV

ACCTG CLK III

ACCTG CLRK I

ACCTG CLRK II

ACCTG CLRK V

ASST CONTROLLER

CONTROLLER

INVNTRY CNTRL

PAYROLL SUPV

RECEIVER

SR ACCOUNTANT

ADMIN CLERK

DIR INTOPRN/HUM RES

EMP REL/DEVMT

EMPL REL MGR

EMPLMT CLRK

HR SPECIALIST

PURC AGENT

RECEPTIONIST

SECRETARY

Yes

2(15)

- 15 -

Accounting

Administrative

- 16 Casino

Casino

406

252

253

314

258

ADM TERM OPTR

ASST CAGE/CREDIT

ASST R/S MGR

AST CAG SHFT

AST COIN MGR

Yes

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

JOB

CODE

422

190E

330

311

404

427

313

431

157E

189E

421

310

153E

156E

155E

438

555

195

326

443

453

452

451

175E

318

465

321

473

186E

476

320

475

513

516

DESCRIPTION

UNIFORM

1988

BINGO AGENT

Yes

BINGO MGR

BINGO SHFT MGR

Yes

BOXPERSON

BRD PRSN CORD

Yes/No

BRUSHPERSON

CAG SHFT SUPV

CAGE CASHIER

Yes

CAGE/CRED MGR

CARD RM MGR

CAROUSEL ATN

Yes

CASINO FLOOR SUPERVISOR No

CASINO MGR

CASN PIT BOSS

CASN SHFT MGR

CHANGE ATTDT

Yes

CHG PRSN TRNR

Yes

COIN RM MGR

Yes

CRD SHFT MGR

CREDIT CLERK

DEALER 21

Yes

DEALER DICE

Yes

DEALER-CRD RM

Yes

DIR SLOT OPRN

HOSP CNTR SUP

HRD COUNT ATN

Yes

KENO 2ND

KENO COMP STA

Yes

KENO MGR

KENO RUNNER

Yes

KENO SHFT MGR

KENO WRITER

Yes

PROP PLAYER

Yes

PROP PLAYER

Yes

R/S CASHIER

Yes

1989

110

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

7(20)

2(10)

+7(20)

7(20)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 16 -

JOB

CLASS

Casino

JOB

CODE

323

517

188E

158E

291

359

574

375

317

316

169E

315

537

187E

010E

259

436

459

160E

479

490

501

171E

014E

279A

265

262

416

415

165E

429

428

521

437

439

DESCRIPTION

R/S SHFT SUPV

R/S TELLER

RACE BOOK MGR

RACE/SPORTS MANAGER

RUNNER

SLOT AREA SUPV

SLOT CLUB ATD

SLOT CLUB SUPV

SLOT FLRPRSN

SLOT HOST

SLOT MGR

SLOT SHFT MGR

SLOT TECH II

SPORTS BK MGR

VP CSNO OPRN

AST FCLTY MGR

CARPENTER

ELECTRICIAN

FACILITY MGR

LABORER

MAINT ENGINR

PAINTER

DIR OPRN

EX VP/GEN MGR

EXEC SECRTY

AST BEV MGR

AST CHEF

BAR BACK

BARTENDER

BEV MGR

BUS - BUFFET

BUS PERSON

BUTCHER

CASHIER-FD

COCKTAIL SERV

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

No Runner

OTHER

BREAKS (MINUTES)

2(15)

1(20) or 2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 17 -

JOB

CLASS

Casino

Engineering

Executive

Food & Bevera

JOB

CODE

455

272

164E

352

163E

461

353

478

477

488

203

510

509

508

269

351E

539

362

361

541

542

544

425

257

418

419

446

445

256E

204

464

472

471

191E

366

DESCRIPTION

DINING RM RUN

EX KIT STEWARD

EXECUTVE CHEF

FOD SHFT SUP

FOOD DIR

FOOD SERVER

HOST PERSON

KITCHN HELP

LD KIT HELP

LINE COOK

MAITRE'D HOTEL

PREP COOK I

PREP COOK II

PREP COOK III

REST OPER MGR

RESTURNT MGR

SNAC BAR ATDN

SPC RM CHEF

SPC RM HD PER

SPEC BUS PERS

SPEC FD SERVR

SPEC LINE CK

SPLY RUNNER

AST EXEC HKSP

BELL CAPTAIN

BELL PERSON

CUSTODIAN I

CUSTODIAN II

EXECUT HSKPR

FRNT DESK SUPV

GUEST RM ATND

HOTEL CLK I

HOTEL CLK II

HOTEL MGR

LD CUSTODIAN

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(20) or 2(10)

1(30)

2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 18 -

JOB

CLASS

Food & Bevera

Hotel

JOB

CODE

336

489

268

502

194

503

255

529

322

440A

304

209E

196E

463

339E

206E

359

512

368

090E

178E

207E

492

180A

533

552

532

159E

331

548

DESCRIPTION

UNIFORM

LD CUSTODIAN

Yes

LINEN RM ATDN

Yes

MGR CUST SVC

PARKG ATDNT

Yes

PBX MANAGER

PBX OPERATOR

RM RESERV MGR

STATUS BD OPR

TRANSP SUPV

COMPUTR OPRTR

D P SUPERV

ADV & PUB MGR

DIR AD/PB/PRO

GRP SALE REP

GRP SALES MGR

PROM/SPECIAL EVENTS MGR No

PROMOT ASST

PROMOTION ATN

Yes

PUBL COORD

SALES ACCT EX

DIR/MGR PUBL

DRCT MAIL CLK

MKT OPR ANYST

SECRTY OFF/IN

Yes

SECRTY OFF/OT

Yes

SECURITY DISP

Yes

SECURITY MANAGER

SECURITY SHFT

Yes

SURVEIL AGENT

1988

936

1989

878

MEAL

CODE1

MEAL

BREAK

MINUTES

40 +/or 30

OTHER

BREAKS (MINUTES)

2(10)

1(20) or 1(30)

20 or 30

2(15)

2(20) or 2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 19 -

JOB

CLASS

Hotel

MIS

Sales & Market

Security

Total

SAM'S TOWN

JOB

CODE

400A

303

403

402A

401A

167E

300

114A

166E

519

546

550

285

172E

184

210

568

057

306

290

282

183

406

281E

314

252E

258

366

422

190E

330

423

470

DESCRIPTION

ACCT CLK IV

ACCT CLK SUPV

ACCTG CLERK I

ACCTG CLK II

ACCTG CLK III

AST CONTRLR

CHIEF ACCT

CONF PAYMASTR

CONTROLLER

RECEIVER

STOCK CLERK

VND MCH ATN

ADMIN CLRK

DIR HUM RES

EMPL REL MGR

EMPLMNT SUPV

EMPLMT CLRK

EMPLOYEES RELATIONS MGR

PURC AGENT

RECEPTIONIST

SECRETARY

TRNG/DEVLP MG

ADM TERM OPTR

ASST SLOT MGR

AST CAG SHFT

AST CAG/CRED

ASST COIN MGR

AST SLT SHFT

BINGO AGENT

BINGO SHIFT SUPV/MGR

BNGO SHFT SUP

BOARD PERSON

BRUSH CASHIER

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

2(20)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 20 -

JOB

CLASS

Accounting

Administrative

Casino

JOB

CODE

427

313

431

157E

189E

310E

153E

156E

155E

555

438

107

195E

346

433

326

443

442

453

452

451

465

321

186E

320

475

365

170

513

516

323

517

DESCRIPTION

BRUSHPERSON

CAG SHFT SUPV

CAGE CASHIER

CAGE/CRED MGR

CARD RM MGR

CASINO FLOOR SUPERVISOR

CASINO MGR

CASN PIT BOSS

CASN SHFT MGR

CHANGE ATTD TRAINER

CHANGE ATTDT

COIN RM MAINT

COIN RM MGR

COIN RM SUPV

CRD RM CASHER

CRD SHFT MGR

CREDIT CLERK

CREDIT CLK II

DEALER 21

DEALER DICE

DEALER-CRD RM

HRD COUNT ATN

KENO 2ND

KENO MGR

KENO SHFT MGR

KENO WRITER

MSTR BK CASHIER

MSTR SLOT TEC

PROP PLAYER

R/S CASHIER

R/S SHFT SUPV

R/S WRITER/TELLER

1988

1989

102

100

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

2(15)

1(30)

2(15)

6(20)

1(30)

1(10)

2(10)

1(30)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 21 -

JOB

CLASS

Casino

JOB

CODE

158E

291

371E

375

574

317

316

169E

283

315

627

538

537

442

160E

479

491

490

498

497

499

501

151E

152E

014E

279E

262E

558

416

415

165E

DESCRIPTION

RACE/SPORTS MGR

RUNNER

SLOT CLB MGR

SLOT CLB SUPV

SLOT CLUB ATD

SLOT FLRPRSN

SLOT HOST

SLOT MGR

SLOT RPR MGR

SLOT SHFT MGR

SLOT SVC ATND

SLOT TECH I

SLOT TECH II

SLOT VLT ATTD

FACILITY MGR

LABORER

MAIN ENG HEP

MAINT ENGINR

OU MNT ATN II

OUT MNT FORMN

OUTSIDE MAINT ATN I

PAINTER

ASST GEN MGR

DIR NGHT OPN

EX VP/GEN MGR

EXEC SECRTY

AST CHEF

BANQ SERVER

BAR BACK

BARTENDER

BEV MGR

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(30)

2(15)

1(20)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 22 -

JOB

CLASS

Casino

Engineering

Executive

Food & Bevera

JOB

CODE

355

428

437

439

447

455

454

457

164E

460

352

163E

461

353

478

477

480

488

510

509

508

269E

351

539

540

354

362

541

542

543

544

547

425

202

DESCRIPTION

BEV SHFT SUPV

BUS PERSON

CASHIER-FD

COCKTAIL SERV

DANCE INSTRUC

DINING RM RUN

DISC JOCKEY

DOOR PERSON

EXECUTIVE CHEF

FD OPER ANLYS

FOD SHFT SUP

FOOD DIR

FOOD SERVER

HOST PERSON

KITCHN HELP

LD KIT HELP

LD LINE COOK

LINE COOK

PREP COOK I

PREP COOK II

PREP COOK III

REST OPER MGR

RESTURNT MGR

SNAC BAR ATDN

SNACK VENDOR

SOUS CHEF

SPC RM CHEF

SPEC BUS PERS

SPEC FD SERVR

SPEC LD LN CK

SPEC LINE CK

STOREM ATDN

SUPPLY RNR

WESTERN DANCE MGR

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

1(20)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 23 -

JOB

CLASS

Food & Bevera

JOB

CODE

408

257

419

260

199E

426

432

260

348A

350

446

445

256E

369

464

472

471

191E

336

486

489

334

493

494

500

502

194E

503

505

507

349

514

255

DESCRIPTION

ALTERN ATNDNT

AST EXEC HSKP

BELL PERSON

BOWL AST MGR

BOWL CNTR DIR/MGR

BOWL DESK CLK

BOWLING CNT MKT

BOWLING MGR

BOWLING OFFICE MGR

CHIEF MECHNC

CUSTODIAN I

CUSTODIAN II

EXECUT HSKPR

FASHION COORD

GUEST RM ATND

HOTEL CLK I

HOTEL CLK II

HOTEL MGR

LD CUSTODIAN

LEAGUE COORDN

LINEN RM ATDN

LINEN RM SUPV

MECHANIC "A"

MECHANIC "B"

MERCH CNTRL

PARKG ATDNT

PBX MANAGER

PBX OPERATOR

PLAYRM ATDNT

POSTAL CLRK

PRO SHOP MGR

PRO SHP ATDNT

RM RESERV MGR

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 24 -

JOB

CLASS

Hotel

JOB

CODE

525

523

524

193

527

526

522

528

536

344

302

567

161E

322

573

440A

304

456A

534

209E

174E

180A

338A

261E

552

532

159E

533

331

548

DESCRIPTION

RV PARK ATTN

RV PARK CLRK

RV PARK LD ATTN

RV PARK MGR

SALES CLERK

SALES CLERK/CASHIER

SALES/COMISNS

SCORE ASSIST

SHUTL BUS DRV

STOR DEPT MGR

STORE FLR MGR

STORE LD CSHR

STORE MGR

TRANS SUPV

TRUCKLD CASN

COMPUTER OPRTR

D P SUPERV

DATA ENTR CLK

SR COMPUTER OP

ADV/PUB MGR

DIR MRKTNG

MKT OPR ANYST

PU/PRO/AD AST

ASST SECURITY MGR

SECRTY OFF/OT

SECURITY DISP

SECURITY MANAGER

SECURITY OFF/IN

SECURITY SHFT

SURVEIL AGENT

1988

1,402

1989

1,508

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 25 -

JOB

CLASS

Hotel

MIS

Sales & Market

Security

Total

STARDUST

JOB

CODE

400A

401A

403

402A

303E

167E

166E

442

205E

104E

301E

519

300E

546

550

278E

285

172E

173E

176

057

210

107

306

290

291

358E

282

305

406

417

154E

314

DESCRIPTION

ACCT CLK IV

ACCTG CLK II

ACCTG CLRK I

ACCTG CLRK II

ACT CLK SUPV

AST CONTRLR

CONTROLLER

CREDIT CLRK II

F & B CONTROLLER

INTRN CNTL SPC

INVNTRY CNTRL

RECEIVER

SR ACCOUNTANT

STOCK CLRK

VND MCH ATN

ADMIN ASST

ADMIN CLRK

DIR HUM RES

DIR ADMIN

EMP REL/DEV

EMP REL/DEVP MGR

EMPLOYMENT SUPV

HR STAFF AST

PURC AGENT

RECEPTIONIST

RUNNER

SAFETY/LOSS MANAGER

SECRETARY

SR PURCH AGENT

ADM TERM OPTR

ADMN TRM COOR

ASSISTANT CASINO MGR

AST CAG SHFT

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

60,45,30

OTHER

BREAKS (MINUTES)

2(15)

2(10)

2(15)

2(10)

2(15)

0,15,(2)15

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 26 -

JOB

CLASS

Accounting

Administrative

Casino

JOB

CODE

252E

258E

281E

423

420

311E

404

427

313E

431

157E

189E

433

421

310E

309E

153E

312E

156E

155E

438

267E

195E

326E

441

453

452

451

370E

318

465

321E

474

186E

476

DESCRIPTION

UNIFORM

AST CAGE/CREDIT

AST COIN MGR

AST SLOT MGR

BOARD PERSON

BOOTH CASHR

Yes

BOXPERSON

BRD PERSON CORD

BRUSHPERSON

Yes

CAG SHFT SUPV

Yes

CAGE CASHIER

Yes

CAGE/CRED MGR

CARD RM MGR

CARD ROOM CASHIER

CAROUSEL ATN

Yes

CASINO FLOOR SUPERVISOR No

CASINO HOST

CASINO MGR

CASN CUST REP

CASN PIT BOSS

CASN SHFT MGR

CHANGE ATTDT

Yes

CLCTN MGR

COIN RM MGR

CRD SHFT MGR

CREDIT CLK III

DEALER 21

Yes

DEALER DICE

Yes

DEALER-CRD RM

Yes

DIR SLT MRKTG

HOSP CENTER SUP

HRD COUNT ATN

KENO 2ND

KENO 3RD

Yes

KENO MGR

KENO RUNNER

Yes

1988

223

1989

222

MEAL

BREAK

OTHER

CODE1

BREAKS (MINUTES)

MINUTES

0 End of drop count

2(10)

7(20)

60,45,30

0,15,(2)15

60,45,30

0,15,(2)15

2(10)

End of drop count

60,45,30

0,15,2(15)

7(20)

Taken after drop

2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 27 -

JOB

CLASS

Casino

JOB

CODE

320E

475

365

504

380E

513

516

325

323E

517

518

188E

158E

371E

375E

574

317

316E

169E

315E

319

538

537

187E

374E

329E

016E

259E

436

459

DESCRIPTION

KENO SHFT MGR

KENO WRITER

MASTER BANK

PIT CLERK

PIT CLK SUPV

PROP PLAYER

R/S CASHIER

R/S COMP SUPV

R/S SHFT SUPV

R/S TELLER

R/S VERITYPE

RACE BK MGR

RACE/SPORTS MGR

SLOT CLB MGR

SLOT CLB SUPV

SLOT CLUB ATD

SLOT FLRPRSN

SLOT HOST

SLOT MGR

SLOT SHFT MGR

SLOT SHOP SUPV

SLOT TECH I

SLOT TECH II

SPORTS BK MGR

SPORTS INFO COORD

TOURNMT DIR

VP/CSNO OPRTN

AST FACILITY MGR

CARPENTER

ELECTRICIAN

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

MINUTES

60,45,30

OTHER

BREAKS (MINUTES)

2(10)

0,15,2(15)

2(15)

2(10)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 28 -

JOB

CLASS

Casino

Engineering

JOB

CODE

160E

479

491

490

498

497

501

575

604

151E

014E

279E

262E

413

414

416

415

165E

355E

429

428

521

356

437

439

455

272E

164E

162E

352E

461

308E

353

DESCRIPTION

FACILITY MGR

LABORER

MAIN ENG HELP

MAINT ENGINR

OU MNT ATN II

OUT MNT FORMN

PAINTER

TRANS DRIVER

UPHOLSTERER

ASST GEN MGR

EX VP/GEN MGR

EXEC SECRTY

AST CHEF

BAKER

BAKER HELPER

BAR BACK

BARTENDER

BEV MGR

BEV SHFT SUPV

BUS - BUFFET

BUS PERSON

BUTCHER

CAPTAIN

CASHIER-FD

COCKTAIL SERV

DINING RM RUN

EX KIT STEWRD

EXECUTVE CHEF

FD/BEV DIR

FOD SHFT SUP

FOOD SERVER

HEAD CASHIER

HOST PERSON

UNIFORM

Yes

1988

126

1989

120

MEAL

CODE1

MEAL

BREAK

MINUTES

OTHER

BREAKS (MINUTES)

2(15)

2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 29 -

JOB

CLASS

Engineering

Executive

Food & Bevera

JOB

CODE

478

477

488

203

263E

510

509

508

269E

351E

623

622

625

539

354

362E

361E

541

542

544

564

425

547

307E

408

343

280

257E

410

192E

412

418

419

430

340E

DESCRIPTION

KITCHN HELP

LD KIT HELP

LINE COOK

MAITRE D HOTEL

PASTRY CHEF

PREP COOK I

PREP COOK II

PREP COOK III

REST MGR

RESTURNT MGR

RM SRVC BUS

RM SRVC SRVR

SHWRM SRVR

SNAC BAR ATDN

SOUS CHEF

SPC RM CHEF

SPC RM HD PER

SPEC BUS PERS

SPEC FD SERVR

SPEC LINE CK

SPLY RUN WHSE

SPLY RUNNER

STORERM ATDN

WRHSE SUPRV

ALTERNATTN

ANIMAL TRN

AST CUST SRVC

AST EXEC HSKP

AST HD WARDRB

AST HOTEL MGR

AST WARDROBE

BELL CAPTAIN

BELL PERSON

BUTTON BOOTH

COMPANY MGR

UNIFORM

Yes

1988

1989

MEAL

CODE1

MEAL

BREAK

OTHER

BREAKS (MINUTES)

MINUTES

2(10)

Break between shows

2(10)

Break between shows

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 30 -

JOB

CLASS

Food & Bevera

Hotel

JOB

CODE

444

446

445

449

448

198E

197E

256E

464

332

617

530

468

467

469

472

471

191E

337

554E

487

489

334

379

378

377

502

194E

503

335

511

520

255E

525

DESCRIPTION

UNIFORM

CUE CALLER

CUSTODAN I

Yes

CUSTODIAN II

Yes

DANCER CONVERED

Yes

DANCER NUDE

Yes

DIR HTL OPRTN

DIR LIDO

EXECUT HSKPR

GUEST RM ATND

Yes

GUEST ROOM SUPERVISOR

Yes

HD AUDIO/VISL

HD ELEC & SOUND

HD PROJECTN

HEAD FLYMAN

HEAD PROP

HOTEL CLK I

HOTEL CLK II

Yes

HOTEL MGR

LD PBX OPERTR

LIDO PRODUCER

LINE CAPTAIN

Yes

LINEN RM ATDN

Yes

LINEN RM SUPV

Yes

MUSICAL PERFORMER

MUSICIAN

ORCHESTRA LDR

PARKG ATDNT

Yes

PBX MANAGER

PBX OPERATOR

POOL SUP

PRIN DANCER

Yes

PROJECTIONIST

RM RESERV MGR

RV PARK ATN

Yes

1988

1989

115

MEAL

CODE1

MEAL

BREAK

OTHER

BREAKS (MINUTES)

MINUTES

2(10)

Break between shows

2(10)

Break between shows

Break betweem shows

1(30)

Break between shows

2(10)

Break between shows

As time permits

1(30)

Break between shows

2(10)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 31 -

JOB

CLASS

Hotel

JOB

CODE

523

524

193

343E

535

435

341E

545

529

551

440A

304E

456

280E

174E

357E

492

339E

109

180A

206E

512A

207E

090E

178E

261E

407

532

159E

533

331E

548E

DESCRIPTION

UNIFORM

RV PARK CLRK

Yes

RV PARK LD ATN

Yes

RV PARK MGR

SALES SUPV

SHOWROOM RESV

Yes

SHOWROOM RESV

Yes

STAGE MGR

STAGEHAND

STATUS BD OPR

WARDROBE ATDN

COMPUTR OPRTR

D P SUPERV

DATA ENTRY CLK

ADVERTISING MGR

DIR MRKTNG

DIRECT MARKTG MANAGER

DRCT MAIL CLK

Yes

GRP SALES MGR

MKT OP ANALYST

MRK OPR ANALST

PROMO/SPECIAL EVENTS MGR No

PROMOTION ATN

PUBLICITY DIR

SALES ACCT EX

SALES ACCT EXEC

AST CHIEF SECURITY

LD SEC OFCR

SECURITY DISP

SECURITY MANAGER

SECURITY OFF/IN

Yes

SECURITY SHFT

SURVEIL AGENT

1988

2,251

1989

2,406

MEAL

CODE1

MEAL

BREAK

OTHER

BREAKS (MINUTES)

MINUTES

2(10)

Break between shows

2(10)

Break between shows

2(15)

1(15)

2(10)

2(15)

The meal code is as follows: 0 = authorization to eat in the public restaurants on the premises; 1 = entitled

to eat one meal per shift in the Cafeterias; 2 = entitled to eat two meals per shift in the Cafeterias.

Not available.

- 32 -

JOB

CLASS

Hotel

MIS

Sales & Market

Security

Total

- 34 The right of many of petitioners' employees to receive meals

from petitioners without charge is set forth in numerous labor

agreements; in the case of outside maintenance attendants,

foremen, and laborers at Stardust, these agreements also provide

that petitioners must pay them the cost of a meal in lieu of a

meal.2

In some cases, these agreements allow an employee to

receive two meals in a workday; most of these employees take

advantage of both meals.

In the case of dealers, who generally

are entitled to a 20-minute break every hour, petitioners'

practice is to allow the dealers to eat during all of their

breaks, and the dealers tend to take advantage of this practice.

The labor agreements, and the titles of the covered

employees (exclusive of the employees in the category "Food and

Beverage"), are as follows:

COLLECTIVE BARGAINING AGREEMENT between STRIP HOTELS

AND CASINOS and LOCAL JOINT EXECUTIVE BOARD OF LAS

VEGAS, CULINARY WORKERS UNION, LOCAL NO. 226, and

BARTENDERS UNION, LOCAL NO. 165 (culinary workers'

agreement):

Stardust: Carousel Attendant, Change

Attendant, Bell Captain, Bell Person,

Custodian I, Custodian II, Guest Room

Attendant, Guest Room Supervisor, Linen Room

Attendant, Linen Room Supervisor, Status

Board Operator.

Fremont: Carousel Attendant, Change

Attendant, Change Person Trainer, Bell

Captain, Bell Person, Custodian I, Custodian

II, Guest Room Attendant, Lead Custodian,

Linen Room Attendant, Status Board Operator.

We are unable to find that these three classifications of

employees do not also receive meals during their shifts. The

record leads us to believe that they do.

- 35 LABOR AGREEMENT[S] between RESORT HOTELS and

PROFESSIONAL, CLERICAL AND MISCELLANEOUS EMPLOYEES,

TEAMSTERS LOCAL UNION NO. 995 (Teamsters' agreements):

Stardust: Receiver, Laborer, Outside

Maintenance Attendant II, Outside Maintenance

Foreman, Parking Attendant, PBX Operator,

Storeroom Attendant, Hotel Clerk I, Hotel

Clerk II, Lead PBX Operator.

Fremont: Hotel Clerk I, Hotel Clerk II,

Parking Attendant, PBX Operator.

CHC (during the 1987 taxable year): Hotel

Clerk I, Hotel Clerk II, Lead Parking

Attendant, Parking Attendant, PBX Operator.

LABOR AGREEMENT between STARDUST HOTEL AND CASINO and

INTERNATIONAL ALLIANCE OF THEATRICAL STAGE EMPLOYEES

AND MOVIE PICTURE MACHINE OPERATORS OF THE UNITED

STATES AND CANADA, LOCAL 720, LAS VEGAS, NEVADA

(THEATRICAL WARDROBE EMPLOYEES) (theatrical workers'

agreement):

Stardust: Alteration Attendant, Assistant

Head Wardrobe, Assistant Wardrobe, Button

Booth, Head Audio/Visual, Head

Electrical/Sound, Head Projection, Head

Flyman, Head Prop, Projectionist, Stagehand,

Wardrobe Attendant, Cue Caller.

LABOR AGREEMENT between [blank space] and INTERNATIONAL

UNION OF OPERATING ENGINEERS, Local No. 501, AFL-CIO

(operating engineers' agreement) and the SLOT MECHANICS

ADDENDUM TO MASTER LABOR AGREEMENT (slot mechanic

workers' agreement):

Stardust: Slot Shop Supervisors, Slot Tech

I, Slot Tech II, Assistant Facility Manager,

Maintenance Engineer Help, Maintenance

Engineer, Maintenance Help.

Fremont: Slot Tech II, Assistant Facility

Manager, Laborer, Maintenance Engineer.

CHC: Assistant Facility Manager, Maintenance

Engineer, Maintenance Engineer Helper.

LABOR AGREEMENT between NEVADA RESORT ASSOCIATION and

UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA

LOCAL UNION NO. 1780, LAS VEGAS, NEVADA (carpenters'

agreement):

- 36 Stardust: Carpenter, Upholster.

Fremont: Carpenter.

LABOR AGREEMENT BETWEEN STARDUST HOTEL and

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL

UNION # 357, AFL/CIO (electricians' agreement):

Stardust:

Electrician.

Fremont:

Electrician.

COLLECTIVE BARGAINING AGREEMENT between STARDUST HOTEL

AND CASINO and MUSICIANS UNION OF LAS VEGAS, LOCAL NO.

369 AMERICAN FEDERATION OF MUSICIANS, AFL/CIO

(musicians' agreement):

Stardust: Musical performer, Musician,

Orchestra Leader.

LABOR AGREEMENT between NEVADA RESORT ASSOCIATION and

INTERNATIONAL BROTHERHOOD OF PAINTERS & ALLIED TRADES

LOCAL UNION NO. 159 AFL/CIO (painters' agreement):

Stardust:

Painter.

Fremont:

Painter.

All of these labor agreements have provisions that address

employee meals.

The culinary workers' agreement provides:

14.01. Meals Furnished by Employer. For the

convenience of the Employer, all employees covered by

this Agreement shall be required to take the meals

hereinafter provided for on the premises of the

Employer. Said meals shall be palatable, wholesome and

comparable in quality to those served to customers. A

selection of meal items shall be made available daily,

including at least two (2) meat entrees. The selection

of meals shall be posted in the employees' cafeteria.

Breakfast, including eggs, will be available to all

shifts. Employees shall have a choice of coffee, tea

or milk at each meal, and shall be entitled to a

dessert at each meal. No entree shall be included on

the menu more than two (2) times in a calendar week. A

fish entree shall be included at least once in a

calendar week. The number of such meals shall be set

forth in Section 14.02. Except as provided otherwise

in Section 14.02(a) and (b), the Employer shall allow

each employee an uninterrupted meal period of thirty

(30) minutes on the Employer's time, plus sufficient

time (not to exceed five (5) minutes each way) to go to

and from the eating area.

- 37 14.02.

Number of Meals.

(a) For the convenience of the Employer, all

employees, except Bartenders, working full shifts shall

be entitled to two (2) meals per day, one of which

shall be eaten within one (1) hour before commencement

of the shift and the second no sooner than three (3)

and no later than five (5) hours after commencement of

the shift. Bartenders shall be entitled to one (1)

meal to be eaten no sooner than three (3) and no later

than five (5) hours after commencement of the shift.

(b) All employees working six (6) or four (4) hour

shifts shall be entitled to one (1) meal per day.

Employees working six (6) hour shifts shall eat no

sooner than three (3) and no later than five (5) hours

after commencement of the shift; and employees working

four (4) hour shifts shall eat before their shift

begins or after their shift ends.

One of the two Teamsters' agreements provides:

5.01. WORKDAY AND OVERTIME. The normal workday

for regular, full-time employees shall consist of eight

(8) hours including forty-five (45) minutes for a meal

period and two (2) fifteen (15) minute rest periods

during each shift.

16.01. MEALS. An employee shall receive one (1)

meal during the course of his shift. The meal will be

scheduled as near to the middle of the shift as is

possible, except for regular part-time employees

working a short shift, who shall be provided with a

prorated meal period after the third (3rd) hour worked.

At the option of the Employer, the employee may be

paid one dollar and fifty cents ($1.50) in lieu

thereof.

Meals served to employees shall be palatable,

wholesome and comparable in quality to those served to

the customers. A selection of meal items shall be made

available daily, including at least two (2) meat entres

[sic]. No entree shall be included on the menu more

than two (2) times in a calendar week. A fish entree

shall be carried at least once in a calendar week.

Breakfast, including eggs, will be made available to

all shifts.

- 38 When relieved from duty, an employee will be

permitted to take assigned lunch and rest periods away

from the immediate work area.

In recognition of the fact that the public

restaurants of the establishments have been provided

for the use of customers and guests * * *, it is agreed

that the Employer retains the right to restrict or

prohibit the use of these facilities by employees.

Employees relieved from duty will be permitted to

leave the premises during their assigned lunch periods;

provided they clock out at the commencement of such

period and clock in at the conclusion thereof.

The other Teamsters' agreement provides:

5.01. WORKDAY. The normal workday for regular

employees shall consist of eight (8) consecutive hours,

including a lunch period. Employees working an eight

(8) hour shift shall receive two (2) fifteen (15)

minute rest periods on the Employer's time--one (1)

prior to their meal period and one (1) following the

meal period. The Employer shall allow each employee an

uninterrupted meal period of thirty (30) minutes on the

Employer's time plus sufficient time (not to exceed

five (5) minutes each way) to go to and from the eating

area.

16.01. MEALS. Except as otherwise provided for

herein, an employee shall receive one (1) meal during

the course of an eight (8) hour shift, as near to the

middle of the shift as possible or, at the option of

the Employer, the employee may be paid one dollar and

fifty cents ($1.50) in lieu thereof. Meals served to

employees shall be palatable, wholesome and comparable

in quality to those served to the customers. A

selection of meal items shall be made available daily,

including at least two (2) meat entrees. No entree

shall be included on the menu more than two (2) times

in a calendar week. A fish entree shall be carried at

least once in a calendar week. Breakfast, including

eggs, will be made available to all shifts. All

employees shall be entitled to an uninterrupted meal

period of thirty (30) minutes.

Golf course maintenance personnel, gardeners and

laborers shall be paid a flat allowance of one dollar

and fifty cents ($1.50) per day in lieu of a meal.

- 39 Employees relieved from duty will be permitted to

leave the premises during their assigned lunch periods;

provided they clock out at the commencement of such

period and clock in at the conclusion thereof.

The theatrical workers' agreement provides:

13.01. Employees in the bargaining unit shall not

be required to work more than five (5) hours without

being allowed a meal break of at least one-half (1/2)

hour, which meal period shall not be considered as time

worked and shall not be paid for by the Employer. Time

off between shows shall be deemed to constitute a meal

period for the purpose of this Section.

Meal periods shall not exceed one (1) hour in

duration and may not be granted sooner than two (2)

hours after the employee begins work. Subsequent meal

periods shall be called not less frequently than every

five (5) hours and not more frequently than every three

(3) hours after the completion of the first meal period

of the day. Meal periods may be staggered among

members of the crew. * * *

13.02. Penalties for Failure to Provide. In the

event that an employee is not provided with a meal

period, as provided in Section 13.01, he shall be paid

at the rate of double (2X) the regular, straight-time

hourly rate for the meal period omitted, and if a meal

period is not provided after six (6) consecutive hours

of work, the employee involved shall be paid at the

rate of time and one-half (1 1/2X) his appropriate rate

of pay for all work performed after six (6) consecutive

hours until a meal period is provided. * * *

13.03. Rest Periods. Employees who are called in

to work an eight (8) hour shift shall be granted two

(2) ten (10) minute rest periods. The first such rest

period shall be granted within the first four (4) hours

of work and the second such rest period within the last

four (4) hours worked.

13.04. Continuation of Present Practice. If,

prior to April 1, 1984, the Employer was furnishing

meals to employees free of charge, or at a discount, it

shall continue to do so during the term of this

Agreement.

The operating engineers' agreement provides:

17.01 Meals. An employee shall be entitled to receive

one (1) meal during the course of an eight (8) hour

- 40 shift, as near to the middle of the shift as possible.

If an employee is required to work overtime for two (2)

hours or more beyond his regular shift, or is called

out in an emergency and works for four (4) hours or

more, he shall be entitled to a meal. Meals served to

employees shall be palatable, wholesome and comparable

in quality to those served to the customers. A

selection of meal items shall be made available daily

[including at least two (2) meat entrees]. An Employer

who fails to provide meals as required above shall pay,

as a penalty, the sum of One Dollar and Fifty Cents

($1.50) for each meal he failed to furnish.

The slot mechanic workers' agreement provides:

6.01 Workday and Workweek. (a) The normal workday for

regular employees shall consist of eight (8)

consecutive hours, inclusive of a meal period. * * *

The Employer shall allow each employee an uninterrupted

meal period of thirty (30) minutes on the Employer's

time, plus sufficient time (not to exceed five (5)

minutes each way) to go to and from the eating area.

17.01. Meals. An employee shall be entitled to

receive one (1) meal during the course of an eight (8)

hour shift, as near to the middle of the shift as

possible. If an employee is required to work overtime

for two (2) hours or more beyond his regular shift, or

is called out in an emergency and works for four (4)

hours or more, he shall be entitled to a meal. Meals

served to employees shall be palatable, wholesome and

comparable in quality to those served to the customers.

A selection of meal items shall be made available daily

[including at least two (2) meat entrees]. An Employer

who fails to provide meals as required above shall pay,

as a penalty, the sum of One Dollar and Fifty Cents

($1.50) for each such meal he failed to furnish.

The carpenters' agreement provides:

ARTICLE 16

Classification and Wage Rates

Note 3:

Meals: An employee shall be entitled to

receive one (1) hot meal during the course of an eight

(8) hour shift, as near to the middle of the shift as

- 41 possible. If an employee is required to work overtime

for two (2) hours or more beyond his regular shift, or

is called out in an emergency and works for four (4)

hours or more, he shall be entitled to a meal. Meals

served to employees shall be palatable, wholesome and

comparable in quality to those served to the customers.

A selection of meal items shall be made available daily

(including at least two (2) meat entrees). An Employer

who fails to provide meals as required above shall pay,

as a penalty, the sum of one dollar and fifty cents

($1.50) for each such meal he failed to furnish.

The electricians' agreement provides:

6.01. Work Day and Work Week. (a) Eight (8)

consecutive hours, inclusive of a one-half (1/2) hour

meal period, within any twenty-four (24) hours shall

constitute a work week. * * *

17.01. Meals. An employee shall receive one (1)

hot meal during the course of an eight (8) hour shift,

as near to the middle of the shift as possible, or, at

the option of the Employer, the employee may be paid

one dollar and fifty cents ($1.50) in lieu thereof. If

an employee is required to work overtime for two (2)

hours or more beyond his regular shift, or is called

out in an emergency and works four (4) hours or more,

he shall be entitled to a meal. Meals served to

employees shall be palatable, wholesome and comparable

in quality to those served to the customers. A

selection of meal items shall be made available daily

(including at least two (2) meat entrees). No entree

shall be included on the menu more than two (2) times

in a calendar week. A fish entree shall be carried at

least once on a calendar week.

An Employer who fails to furnish employees with

meals, as required, shall be obligated to pay a penalty

of one dollar and fifty cents ($1.50) to the employee

for each such meal he failed to provide.

The musicians' agreement provides:

12.02. Rehearsal Meal Periods. During any

rehearsal called before twelve o'clock (12:00) noon, a

lunch period of forty-five (45) minutes, at no cost to

the Employer, must be allowed during the first three

(3) hours. If such rehearsal continues, a second meal

- 42 period of forty-five (45) minutes, at no cost to the

Employer, shall be provided six (6) hours after the end

of the first meal period. Except in cases of

rehearsals called before twelve o'clock (12:00) noon,

as provided above, it is agreed that a lunch period of

forty-five (45) minutes, at no cost to the Employer,

shall be allowed after six (6) hours of rehearsal.

The painters' agreement provides:

16.03.(a) Meals. An employee shall receive one

(1) hot meal during the course of an eight (8) hour

shift, as near to the middle of the shift as possible.

If an employee is required to work overtime for two (2)

hours or more beyond his regular shift, or is called

out in an emergency and works four (4) hours or more,

he shall be entitled to a meal. Meals served to

employees shall be palatable, wholesome and comparable

in quality to those served to the customers. A

selection of meal items shall be made available daily

(including at least two (2) meat entrees). No entree

shall be included on the menu more than two (2) times

in a calendar week. A fish entree shall be carried at

least once in a calendar week.

An Employer who fails to furnish employees with

meals, as required, shall be obligated to pay a penalty

of one dollar and fifty cents ($1.50) to the employee

for each such meal he failed to provide.

The Properties are open 24 hours a day, 7 days a week, and

petitioners try to have employees available around the clock to

meet customer needs.

Petitioners generally assign each employee

to one of the following shifts:

Shift 1 (Graveyard)

Shift 2 (Day)

Shift 3 (Swing)

Shift 4 (Relief)

Begins at or after 10 p.m.

Begins at or after 6 a.m.

Begins at or after 3 p.m.

Combines 2 or more shifts per workweek

Employees are assigned to their shifts according to the needs of

a department, and each employee's assignment of shift differs by

department, job classification, and Property.

The record does

not disclose which or how many employees are assigned to each

- 43 shift, or the hours per day worked by each or any of the

employees.3

Meal breaks range in length from 30 to 60 minutes, and the

length of an employee's break depends primarily on the Property

where he or she works, as well as his or her job classification.

Each department decides how its employees will take their breaks,

and petitioners stagger the employees' breaks (and shifts) so

that enough employees are working at all times.

Some employees

are cross-trained to fill in for employees who are on a break or

otherwise to provide extra help when needed.

Petitioners

generally require that employees stay on the premises during

their shifts (including breaks), and, under petitioners' policy,

an employee who leaves during his or her shift, without

authorization, is subject to disciplinary action up to and

including dismissal.

No employee was disciplined during the

subject years for leaving the premises during a break.

It is

petitioners' stated policy that they may call an employee back to

his or her job from a break in case of necessity.

not typically do so.

Petitioners do

Typically, in case of necessity, an

employee will postpone his or her break and take the break when

the necessity subsides.

Petitioners keep no records on the

employees who have been called back to work from a break.

The record discloses only that a majority of the

custodians at the Stardust work an 8-hour shift beginning at

either 12 a.m. or 1 a.m., and that a majority of the guest room

attendants at the Stardust work during the day.

- 44 In case of a fire, bomb threat, or similar crisis,

petitioners' policy requires nonmanagerial employees who are at

their work sites at the time of the crisis to secure their work

areas and leave the building immediately, while, on their way

out, advising patrons of the need to leave the building.

Nonmanagerial employees who are on a break during a crisis are

instructed not to return to their work areas but to leave the

building immediately while, on their way out, advising patrons of

the need to leave the building.

Managers are mainly responsible

during a crisis to oversee the evacuation of the building.

Petitioners have not had to evacuate CHC during the period from

1976 to date, and the record does not indicate that any of the

other Properties were evacuated during this same time period.

CHC has had one bomb threat and one hostage situation from 1976

to date.

Some employees wear uniforms while on duty.

lists these employees by job description.)

(The table

A cocktail waitress,

for example, wears a very short black dress, and a dealer wears a

pair of black slacks and a Hawaiian-style shirt.

Each employee's

uniform is specific to the Property at which he or she works, and

the uniform tends to identify the employee as an employee of that

Property.

Employees are allowed to wear their uniforms to and

from work, or they may change into their uniforms at the

Properties in a room provided by petitioners; petitioners also

provide their employees with storage space for their clothing.

- 45 Petitioners do not limit an employee's activities when he or she

travels to or from work in uniform.

The employees who travel

from work in uniforms typically change their uniforms before

going out on personal business after work, but some uniformed

employees have gone out after work in uniform and eaten at a

competitor's restaurant.

Petitioners make no attempt to account for the actual cost

of the meals that are served at the Cafeterias.

In the case of

Stardust, petitioners expense a flat charge per month, regardless

of the number of meals served, based on an estimate of food costs

that was made before the subject years.

For the other

Properties, petitioners multiply a fixed amount (ranging from

$1.75 to $2) by the number of full-time employees on the rolls of

each department in each month.

In accordance with this expending

policy, petitioners ascertained that their direct costs for the

Cafeterias for the 1987 and 1988 taxable years were as follows:

CHC

Fremont

Sam's Town

Stardust

Total

1987

1988

$459,205

372,705

741,366

1,215,638

2,788,914

$616,483

388,546

811,628

2,030,010

3,846,667

Petitioners deducted all of these costs, with the exception of

the following amounts for 1987:

CHC

Fremont

Sam's Town

Stardust

Total

$68,044

45,781

98,012

145,978

357,815

- 46 Respondent determined (and reflected in the notices of

deficiency) that petitioners could not deduct the following

amounts on account of section 274(n):

CHC

Fremont

Sam's Town

Stardust

Total

1987

1988

$23,797

28,760

59,651

97,150

209,358

$102,027

77,709

171,446

406,002

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

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...)

- 47 de minimis fringe benefit if the meals meet the requirements of

section 132(e)(2),5 which, in turn, requires that the meals meet

the five-prong test (the Boyd test) set forth by the Court in

Boyd Gaming Corp. v. Commissioner, 106 T.C. at 348.

The outcome

turns on whether petitioners furnished meals to each of

substantially all of their employees for a substantial

noncompensatory business reason within the meaning of section 119

and the regulations thereunder.

We set forth our analysis as follows.

First, we analyze the

Boyd test and the general principles of law that relate thereto.

Second, we analyze petitioners' reasons for furnishing the meals

(...continued)

any expense if-*

(B) in the case of an expense for food

or beverages, such expense is excludable from

the gross income of the recipient under

section 132 by reason of subsection (e)

thereof (relating to de minimis fringes),

Sec. 132(e)(2) provides:

(2) Treatment of certain eating facilities.--The

operation by an employer of any eating facility for

employees shall be treated as a de minimis fringe if-(A) such facility is located on or near

the business premises of the employer, and

(B) revenue derived from such facility

normally equals or exceeds the direct

operating costs of such facility. * * *

- 48 to their employees.

Third, we analyze whether petitioners

furnished the meals at each of the Properties to each of

substantially all of their employees at the Property for the

convenience of the employer.

In other words, with respect to

each year, we look at each employee and determine whether section

119 allows him or her to exclude the value of the meals from

gross income, and we then determine whether the number of

employees at each Property who may exclude their meals comprises

substantially all of the employees at that Property.

For

purposes of this litigation, the parties have stipulated whether

section 119 excludes the meals of employees in certain job

descriptions.

Respondent has conceded that the meals received by

employees in the following job descriptions are excludable under

section 119:

CHC

Casino:

Dealer Dice, Dealer 21

Engineering:

Engineer Helper

Maintenance Engineer, Maintenance

Food and Beverage: Food and Beverage Director,

Executive Chef, Beverage Manager, Assistant Food

Director, Assistant Chef, Restaurant Manager, Food

Shift Supervisor, Host Person, Sous Chef, Kitchen

Runner, Bus Person, Cashier--Food, Dining Room Runner,

Food Server, Lead Kitchen Help, Kitchen Help, Lead Line

Cook, Line Cook, Prep Cook III, Prep Cook II, Prep Cook

I, Snack Bar Attendant, Special Bus Person, Special

Food Server, Special Lead Line Cook, Special Line Cook,

Banquet Server

MIS:

Computer Operator

- 49 Security: Security Manager, Assistant Security

Manager, Security Shift, Security Dispatcher, Security

Officer/In, Surveillance Agent, Security Officer/Out

Fremont

Casino:

Dealer Dice, Dealer 21, Dealer-Card Room

Engineering:

Maintenance Engineer

Food and Beverage: Assistant Beverage Manager,

Assistant Chef, Beverage Manager, Bus-Buffet, Bus

Person, Butcher, Cashier--Food, Dining Room Runner,

Executive Kitchen Steward, Executive Chef, Food Shift

Supervisor, Food Director, Food Server, Host Person,

Kitchen Help, Lead Kitchen Help, Line Cook, Maitre' D

Hotel, Prep Cook I, Prep Cook II, Prep Cook III,

Restaurant Operating Manager, Restaurant Manager, Snack

Bar Attendant, Special Room Chef, Special Room Hand

Person, Special Bus Person, Special Food Server,

Special Line Cook, Specialty Runner

MIS:

Computer Operator

Security: Security Officer/In, Security

Officer/Out, Security Dispatcher, Security Manager,

Security Shift, Surveillance Agent

Sam's Town

Casino:

Dealer 21, Dealer Dice, Dealer--Card Room

Engineering:

Engineer Helper

Maintenance Engineer, Maintenance

Food and Beverage: Assistant Chef, Banquet

Server, Beverage Manager, Beverage Shift Supervisor,

Bus Person, Cashier--Food, Dance Instructor, Dining

Room Runner, Disc Jockey, Door Person, Executive Chef,

Food Operator Analysis, Food Shift Supervisor, Food

Director, Food Server, Host Person, Kitchen Help, Lead

Kitchen Help, Lead Line Cook, Line Cook, Prep Cook I,

Prep Cook II, Prep Cook III, Restaurant Manager, Snack

Bar Attendant, Snack Vendor, Sous Chef, Special Room

Chef, Special Bus Person, Special Food Server, Special

Lead Line Cook, Special Line Cook, Store Attendant,

Supply Runner, Western Dance Manager

MIS:

Computer Operator

- 50 Security: Assistant Security Manager, Security

Officer/Out, Security Dispatcher, Security Manager,

Security Officer/In, Security Shift, Surveillance Agent

Stardust

Casino:

Dealer 21, Dealer Dice, Dealer--Card Room

Engineering: Maintenance Engineer Helper,

Maintenance Engineer

Food and Beverage: Assistant Chef, Baker, Baker

Helper, Beverage Manager, Beverage Shift Supervisor,

Bus-Buffet, Bus Person, Butcher, Captain, Cashier-Food, Dining Room Runner, Executive Kitchen Chef,

Executive Chef, Food/Beverage Director, Food Shift

Supervisor, Food Server, Head Cashier, Host Person,

Kitchen Help, Lead Kitchen Help, Line Cook, Maitre' D

Hotel, Pastry Chef, Prep Cook I, Prep Cook II, Prep

Cook III, Restaurant Operations Manager, Restaurant

Manager, Room Service Bus, Room Service Server,

Showroom Server, Snack Bar Attendant, Sous Chef,

Special Room Chef, Special Room Hand Person, Special

Bus Person, Special Food Server, Special Line Cook,

Supply Runner Warehouse, Supply Runner, Storeroom

Attendant, Warehouse Supervisor

MIS:

Computer Operator

Security: Assistant Chief Security, Lead Security

Officer, Security Dispatcher, Security Manager,

Security Officer/In, Security Shift, Surveillance Agent

Petitioners have conceded that the meals received by

employees in the following job descriptions are not excludable

under section 119, unless the employee works the graveyard shift

or unless section 1.119-1(a)(ii)(e), Income Tax Regs., applies:

CHC

Accounting: Controller, Assistant Controller,

Payroll Supervisor, Chief Accountant, Accounting Clerk

Supervisor, Accounting Clerk IV, Accounting Clerk III,

Accounting Clerk II

- 51 Administrative: Employee Relations Development

Manager, Human Resources Specialist, Director of Human

Resources, Employee Relations Manager, Office Manager,

Secretary, Administrative Clerk, Purchasing Agent,

Casino:

Instructor

Director of Gaming School, Gaming School

Sales & Marketing: Director of Sales, Director of

Advertising/Public/Promotions, Advertising and

Publication Manager, Publicity/Promotions/Advertising

Assistant, Group Sales Manager, Group Sales

Representative, Promotions Attendant

Fremont

Accounting: Accounting Clerk IV, Accounting Clerk

III, Accounting Clerk II, Accounting Clerk I,

Accounting Clerk V, Assistant Controller, Controller,

Inventory Control, Payroll Supervisor, Senior

Accountant

Administrative: Administrative Clerk, Director

Internal Operations/Human Resources, Employee

Relations/Development, Employee Relations Manager,

Employment Clerk, Human Resource Specialist, Purchasing

Agent, Receptionist, Secretary

Sales & Marketing: Advertising and Publication

Manager, Director Advertising/Publicity/Promotions,

Group Sales Representative, Group Sales Manager,

Promotions/Special Events Manager, Promotions

Assistant, Promotions Attendant, Public Coordinator,

Sales Account Executive, Director/Manager Publication,

Direct Mail Clerk, Market Operations Analyst

Sam's Town

Accounting: Accounting Clerk IV, Accounting Clerk

Supervisor, Accounting Clerk I, Accounting Clerk II,

Accounting Clerk III, Assistant Controller, Chief

Accountant, Conference Paymaster, Controller, Vending

Machine Attendant

Administrative: Administrative Clerk, Director of

Human Resources, Employment Supervisor, Employment

Clerk, Purchasing Agent, Receptionist, Secretary

- 52 Hotel: Sales Clerk, Sales Clerk/Cashier,

Sales/Commissions, Store Lead Cashier

Sales & Marketing: Marketing Director, Marketing

Operation Analyst, Publicity/Promotions/Advertising

Assistant

Stardust

Accounting: Accounting Clerk IV, Accounting Clerk

III, Accounting Clerk II, Accounting Clerk I,

Accounting Clerk Supervisor, Assistant Controller,

Controller, Credit Clerk II, Food & Beverage

Comptroller, Internal Control Specialist, Inventory

Control, Senior Accountant, Vending Machine Attendant

Administrative: Administrative Assistant,

Administrative Clerk, Director Human Resources,

Director Administration, Employee

Relations/Development, Employee Relations/Development

Manager, Employment Supervisor, Human Resource Staff

Assistant, Purchasing Agent, Receptionist, Runner,

Safety Loss Manager, Secretary, Senior Purchasing Agent

Sales & Marketing: Advertising Manager, Director

Marketing, Director Marketing Manager, Direct Mail

Clerk, Group Sales Manager, Market Operations Analyst,

Market Operator Analyst, Promotions/Special Events

Manager, Promotions Attendant, Promotions Director,

Sales Account Ex, Sales Account Executive

Turning first to the Boyd test, which is applied separately

to each eating facility at issue, we find that employee meals

which are provided by an employer on a nondiscriminatory basis

are a de minimis fringe benefit under section 132(e) if:

(1) The

eating facility is owned or leased by the employer, (2) the

facility is operated by the employer, (3) the facility is located

on or near the business premises of the employer, (4) the meals

furnished at the facility are provided during, or immediately

before or after, the employee’s workday, and (5) the annual

- 53 revenue derived from the facility equals or exceeds the direct

operating costs of the facility (the revenue/operating cost

Boyd Gaming Corp. v. Commissioner, 106 T.C. at 348; see

test).

also sec. 132(e)(2); sec. 1.132-7(a), Income Tax Regs.

The

parties focus mainly on the revenue/operating cost test.

we.

So do

For purposes of the revenue/operating cost test, an employer

may disregard the cost and revenue for each employee meal that

the employer determines reasonably is excludable from the

recipient's gross income under section 119.

Income Tax Regs.6

Sec. 1.132-7(a)(2),

Section 119(a) excludes from the recipient's

gross income "the value of any meals * * * furnished to him, his

spouse, or any of his dependents by or on behalf of his employer

for the convenience of the employer, but only if * * * the meals

are furnished on the business premises of the employer".

Sec.

119(a).

The parties agree that section 119 allows some, but not all,

of petitioners' employees to exclude from gross income the value

of meals received from their employers.

The parties dispute

whether section 119 allows each of substantially all of the

employees to exclude the value of the meals from gross income.

Sec. 1.132-7(a)(2), Income Tax Regs., provides:

If an employer can reasonably determine the number of

meals that are excludable from income by the recipient

employees under section 119, the employer may, in

determining whether the * * * [revenue/operating cost

test] is satisfied, disregard all costs and revenues

attributable to such meals provided to such employees.

- 54 If section 119 provides for such an allowance, section

1.119-1(a)(2)(ii)(e), Income Tax Regs., allows petitioners to

deduct 100 percent of the costs incurred to provide the meals.7

Boyd Gaming Corp v. Commissioner, 106 T.C. 343 (1996); see also

sec. 274(n)(2)(B); sec. 1.132-7(a)(2), Income Tax Regs.

section 119 does not provide for such an allowance, petitioners'

deductions for the meals are limited by section 274(n)(1) to 80

percent of the cost of the meals.

Petitioners argue that section 119 allows each of

substantially all of the employees to exclude the value of the

meals from gross income.

According to petitioners, they had

substantial noncompensatory business reasons for providing meals

to each of substantially all of their employees, and petitioners

determined reasonably that the meals were excludable from each

employee's gross income under section 119.

Respondent counters

that petitioners cannot determine the number of meals excludable

from gross income under section 119, which is a prerequisite to

the application of section 1.132-7(a)(2), Income Tax Regs.,

because petitioners failed to keep the required documentation to

Sec. 1.119-1(a)(2)(ii)(e), Income Tax Regs., provides:

If the employer furnishes meals to employees at a place

of business and the reason for furnishing the meals to

each of substantially all of the employees who are

furnished the meals is a substantial noncompensatory

business reason of the employer, the meals furnished to

each other employee will also be regarded as furnished

for a substantial noncompensatory business reason of

the employer.

- 55 establish, among other things, the number of meals eaten, by whom

the meals were eaten, or at what time the meals were eaten.

Respondent also argues that substantially all of petitioners'

employees did not receive the meals for a substantial

noncompensatory business reason because less than 90 percent of

the employees qualified for the section 119 exclusion.

Respondent relies on section 1.119-1(f), Example (9), Income Tax

Regs., in asserting that the "substantially all" test of section

1.119-1(a)(2)(e), Income Tax Regs., requires that at least

90 percent of the meals received by the employees be excludable

under section 119.

Section 1.119-1(f), Example (9), Income Tax

Regs., sets forth an example under which 91.3 percent of the

taxpayer's employees is "substantially all" of the taxpayer's

employees within the meaning of the regulations.

This example

states:

A hospital maintains a cafeteria on its premises where

all of its 230 employees may obtain a meal during their

working hours. No charge is made for these meals. The

hospital furnishes such meals in order to have each of

210 of the employees available for any emergencies that

may occur, and it is shown that each such employee is

at times called upon to perform services during his

meal period. Although the hospital does not require

such employees to remain on the premises during meal

periods, they rarely leave the hospital during their

meal period. Since the hospital furnishes meals to

each of substantially all of its employees in order to

have each of them available for emergency call during

his meal period, all of the hospital employees who

obtain their meals in the hospital cafeteria may

exclude from their gross income the value of such

meals.

- 56 We agree with respondent that section 119 does not allow

each of substantially all of petitioners' employees to exclude

the value of the meals from gross income.8

with section 61(a).

We start our analysis

Section 61(a) includes in gross income all

income from whatever source derived, absent a contrary provision

in subtitle A of the Code (sections 1 to 1563).

The definition

of gross income under section 61(a) broadly encompasses any

accession to a taxpayer's wealth.

United States v. Burke,

504 U.S. 229 (1992); Commissioner v. Kowalski, 434 U.S. 77, 82-83

(1977); Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431

(1955); Helvering v. Clifford, 309 U.S. 331, 334 (1940).

Exclusions from gross income, by contrast, are matters of

legislative grace and are construed narrowly to maximize the

taxation of any accession to wealth.

United States v. Burke,

supra at 248 (Souter, J., concurring in the judgment); United

States v. Centennial Sav. Bank FSB, 499 U.S. 573, 583 (1991);

At the outset, we note that petitioners misinterpret a

sentence in Boyd Gaming Corp. v. Commissioner, 106 T.C. 343

(1996), in asserting that their "reasonable belief" that the full

cost of the meals are excludable from gross income under sec. 119

is enough to come within sec. 1.132-7(a)(2), Income Tax Regs.

The sentence states that "petitioners may deduct the meals' full

cost if they reasonably determine that the meals are excludable

from their employees' incomes under section 119." Id. at 353.

Taken in context, this sentence means that petitioners may deduct

the full cost of the meals if 100 percent of the meals are

excludable from gross income. Respondent also misconstrues the

breadth of this sentence. Contrary to respondent's assertion,

petitioners do not have to prove the exact number of meals

subject to sec. 119 if that section excludes 100 percent of the

meals.

- 57 Commissioner v. Jacobson, 336 U.S. 28, 49 (1949); Robinson v.

Commissioner, 102 T.C. 116, 124-125 (1994), affd. in part, revd.

in part on another issue, and remanded 70 F.3d 34 (5th Cir.

1995).

Given the broad sweep of inclusions vis-a-vis the narrow

construction of exclusions, it naturally follows that an

accession to wealth is prima facie includable in gross income

under section 61(a) unless an exclusion in sections 1 through

United States v. Burke, supra at

1563 clearly directs otherwise.

248 (Souter, J., concurring in the judgment); United States v.

Centennial Sav. Bank FSB, supra at 1519; Commissioner v.

Jacobson, supra at 49; Robinson v. Commissioner, supra at 125;

see Commissioner v. Kowalski, supra at 83.

Petitioners argue that substantially all of the meals are

excludable from the gross income of the recipient employees under

the exclusion of section 119.

From the text of section 119, we

understand that the gross income of an employee who meets a

two-prong test does not include the value of a meal received from

his or her employer.

Under the first prong, the meal must be

furnished by the employer on its business premises.

Under the

second prong, the meal must be furnished to the employee for the

convenience of the employer.

Tax Regs.