- 8 -
penalty, section 7491(c) places on the Commissioner the burden of
production.
A. Section 119 Exclusion
Unless otherwise specifically excluded, gross income
includes all income from whatever source derived, including
compensation for services. Sec. 61(a)(1). Compensation for
services includes income realized in any form including money,
property, or services. Sec. 1.61-2(d)(3), Income Tax Regs.
Section 119(a), however, excludes from gross income the value of
lodging furnished to an employee, his spouse, and his dependents
by his employer only if three conditions are met: (1) The
employee is required to accept such lodging as a condition of
employment; (2) the lodging is furnished for the convenience of
the employer; and (3) the lodging is on the business premises of
the employer. See sec. 1.119-1(b), Income Tax Regs. The value
of the lodging will be included in gross income if the employee
fails to meet any of these three conditions. Dole v.
Commissioner, 43 T.C. 697 (1965), affd. per curiam 351 F.2d 308
(1st Cir. 1965).
The parties do not dispute that petitioners meet the first
two tests under section 119(a). At issue is whether the lodging
was on the business premises of the employer.
Section 1.119-1(c)(1), Income Tax Regs., defines business
premises of the employer as the place of employment of the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011