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In support of their argument, petitioners cite McDowell v.
Commissioner, supra. In McDowell, the Commissioner argued that
the taxpayers were not entitled to exclude the cost of meals from
their income because they were prepared by the taxpayers from
food purchased at the grocery store. In McDowell, we declined to
consider the Commissioner’s argument, which was raised for the
first time in the Commissioner’s reply brief, because there was
no evidence in the record as to preparation of the meals, and
“the rudimentary principles of equity and justice forbid our
consideration of this argument.” Id. We did not address whether
cash reimbursements for groceries provided under similar
circumstances qualified under section 119(a) as in-kind meals.
We allowed the exclusion, noting there was no question that the
meals were furnished on the business premises of the employer-
corporation and the meals were provided for the convenience of
the employer-corporation. Our decision in McDowell is
distinguishable from this case.
Petitioners also rely on Caratan v. Commissioner, 442 F.2d
606 (9th Cir. 1971), revg. 52 T.C. 960 (1969), Johnson v.
Commissioner, T.C. Memo. 1985-175, and J. Grant Farms, Inc. v.
Commissioner, T.C. Memo. 1985-174. The sole issue in each of
these cases was whether the taxpayers were required to accept
lodging furnished to them as a condition of their employment as
required by section 119(a). In each of these cases, the parties
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