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III. Were Mr. and Mrs. Dobbe Entitled To Exclude the Amount of
Reimbursement for Groceries From Their Income Under Section
119(a)?
Under certain conditions, meals furnished for the
convenience of the employer are excludable from the gross income
of the employee. See sec. 119(a) and (b). The value of meals
furnished to an employee by his employer is excluded from an
employee’s gross income if two elements are met: (1) The meals
are furnished on the business premises of the employer, and (2)
the meals are furnished for the convenience of the employer. See
sec. 119(a); sec. 1.119-1(a)(1), Income Tax Regs. Meals must be
provided in kind. See Commissioner v. Kowalski, 434 U.S. 77, 84
(1977); Tougher v. Commissioner, 51 T.C. 737, 744-746 (1969),
affd. 441 F.2d 1148 (9th Cir. 1971).
Mr. and Mrs. Dobbe argue they are entitled to exclude the
grocery reimbursement from their income under section 119(a).
Respondent disagrees, arguing that, in order to be excludable
under section 119(a), meals must be provided in kind and on the
business premises of the employer. Respondent disallowed the
exclusion, and we uphold respondent’s determination.
The grocery reimbursement is not excludable under section
119(a) for two reasons. First, our holding that the leases did
not include Mr. and Mrs. Dobbe’s residence leads to the
conclusion that the meals in question were furnished to Mr. and
Mrs. Dobbe in their personal residence and not on Holland
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