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employees,” they are deductible by the employer as ordinary and
necessary business expenses under section 162(a). Sec.
1.162-10(a), Income Tax Regs. Consequently, Waterfall Farms is
entitled to deduct the insurance premiums and medical
reimbursement payments under section 162(a).
C. Food and Rent
1. Section 119: Employer-Provided Meals and Lodging
We next decide whether the food and rent are employer-
provided meals and lodging expenses, excludable from the Hubers’
income under section 119 and deductible by Waterfall Farms under
section 162.
Meals and lodging furnished to an employee by his employer
are excluded from the employee’s gross income under section 119
if the meals and lodging are provided for the convenience of the
employer on the premises of the employer. In the case of
lodging, the employee must be required to accept the lodging on
the business premises of his employer as a condition of
employment.
The term “‘business premises of the employer’ generally
means the place of employment of the employee.” Sec.
1.119-1(c)(1), Income Tax Regs. They are the premises where the
employee performs a significant portion of his duties or where
the employer conducts a significant portion of its business.
McDonald v. Commissioner, 66 T.C. 223 (1976). The extent or
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