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Section 119 excludes from income the value of meals provided to the employees:
When the meals are provided by the employer
When the meals are furnished on the employers premises
When the meals are furnished for the convenience of the employer
When a b and c are all true
None of the above
Ridge is the manger of a motel. As a condition of his employment, Ridge is required to live in a room on the premises so that he would be there in case of emergencies. Ridge considered this a fringe benefit, since he would otherwise be required to pay $600 per month rent. The room that Ridge occupied normally rented for $60 per night or $1500 per month. On the average 90% of the motel rooms are occupied. As a result of this rent- free use of a room, Ridge is required to include in Gross income.
$0
$600 per month
$1500
$1350 ($1500 x .90) = $1350
None of the above
Expert Answer
1 ) Section 119 excludes from income the value of meals provided to the employees:
When the meals are furnished on the employers premises ( option B is correct )
The employers premises means the employee’s place of employment
2 ) As a result of this rent- free use of a room, Ridge is required to include $ 0 in Gross income as the room qualifies for Section 119 lodging exclusion.
Option A is correct.
