Court Opinion

ID: 4480151
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:14:06.047993+00
Date Added: 2024-06-11T14:53:58.930584
License: Public Domain

Eatjm, /., concurring: Eegardless of whether the claimed exclusion from gross income may be denied on this record for the first reason discussed in the majority opinion, it is clear to me that no such exclusion is available since the houses were not “on the business premises” of the employer, as required by section 119. The furnishing of tax-free food and lodging to corporate officers or other employees was susceptible of abuse, and the tests applied to determine the tax-free character of the food or lodging were unsatisfactory ; accordingly, section 119 was enacted in the 1954 Code to spell out with particularity the restrictive conditions under which such exceptional tax treatment would be permitted. One of those conditions is that the lodging must be “on the business premises” of the employer. The statute does not say “at some convenient or reasonably accessible” place; it does not say “in any nearby building” owned by the employer. It says “on the business premises” of the employer. These words mean what they say and should not be given any strained or eccentric interpretation so as to frustrate what the Legislature obviously tried to achieve. The attempt to justify such interpretation in one of the concurring opinions by seeking out a pivotal distinction between the words “on the business premises” and “at the place of employment” has no convincing support in the legislative history. The term “at the place of employment” which was in the original bill passed by the House was replaced with “on the business premises of the employer” by the Senate Finance Committee without any clarifying comment in this respect. S. Rept. No. 1622, supra at 19, 190. A reading of the Senate Finance Committee’s report discloses nothing to suggest that the substituted words were regarded as having any significantly different meaning or that they represented anything other than a draftsman’s preference in language. This is confirmed by the Conference Committee’s statement, H. Rept. No. 2543, supra at 27, that “The term ‘business premises of the employer’ is intended, in general, to have the same effect as the term ‘place of employment’ in the House bill.” Nothing in the history of these provisions even intimates that the term “on the business premises of the employer” was meant to have so much more elastic content than “at the place of employment” as to embrace a house 1 mile away. To the contrary, the examples given in the report of the Conference Committee are those of lodging furnished to a domestic servant in the employer’s home or meals furnished to a cowhand herding his employer’s cattle on leased lands or lands similarly used under permit. It may be true, as urged in the dissenting opinion, that petitioners’ employer had a legitimate business purpose in owning the houses, but it is specious to suggest that the occupancy of the houses in these circumstances itself constituted the conduct of the employer’s business so that they themselves might qualify as “business premises.” No business of the employer was conducted at these houses. To construe the statute otherwise would be to dispense entirely with the requirement in section 119 that the lodging be furnished “on the business premises of the employer”; for one could argue with equal persuasiveness in every case that the house is on the business premises where the other conditions of the statute are satisfied, namely, where the lodging is furnished for the convenience of the employer and is required as a condition of employment. If compliance with these latter two requirements is sufficient to justify characterizing the house itself as “business premises” and thus to make the exemption applicable, the third condition, as to “business premises,” would become wholly meaningless. I cannot believe that 'Congress intended any such futile result, and it seems clear that the condition relating to “business premises” was meant to have independent operative scope. It is also plain to me that Congress used that term in the normal sense as referring to the actual conduct of the employer’s business and not in some esoteric sense relating to the purpose for which the property was held. The matter probably would never have reached this present state of apparent confusion and disagreement among the members of this Court were it not for the unreviewed decision in Charles N. Anderson, 42 T.C. 410. I think that Anderson is distinguishable for the reason articulated in the majority opinion. But I also think that it is wrong and that it should be overruled to put an end to the confusion that it has created. The fact that the motel manager’s house in Anderson was “only two short blocks” (42 T.C. at 415) from the motel property should have been totally irrelevant. The house either was or was not “on the business premises,” and I can find no basis in the statute to stretch those premises “two short blocks,” or “one short block,” or even “one-half short block” beyond the perimeter of the motel property. Of course, if “two short blocks” are not fatal, it is easy to see how one might be tempted to enlarge the distance to the 1 mile involved herein, or, for that matter, 2 miles or 5 miles. The real difficulty is that neither the residence in Anderson nor any single residence involved herein is “on the business premises” of the employer. And in view of the mischief generated by Anderson I think it should be explicitly disapproved. PiERCE and MulkoNey, JJagree with this concurring opinion. TietjeNS, J., agrees with Judge Eaum’s concurring opinion except so far as it suggests that Charles N. Anderson, 42 T.C. 410, should be “explicitly disapproved.”