Court Opinion

ID: 4483273
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:16:00.093362+00
Date Added: 2024-06-11T14:44:33.532894
License: Public Domain

Simpson, J., concurring: I agree with the conclusion of the majority, but I have different reasons for so concluding. Section 119 allows an employee to exclude the value of meals or lodging furnished by and for the convenience of the employer, and the Treasury regulations have recognized that such exclusion is available in some situations when there is a charge for the meals or lodging. Section 1.119-l(a)(3), Income Tax Regs., provides: (3) Meals furnished with a charge, (i) If an employer provides meals which an employee may or may not purchase, the meals will not be regarded as furnished for the convenience of the employer. Thus, meals for which a charge is made by the employer will not be regarded as furnished for the convenience of the employer if the employee has a choice of accepting the meals and paying for them or of not paying for them and providing his meals in another manner. (ii) If an employer furnishes an employee meals for which the employee is charged an unvarying amount (for example, by subtraction from his stated compensation) irrespective of whether he accepts the meals, the amount of such flat charge made by the employer for such meals is not, as such, part of the compensation includible in the gross income of the employee; whether the value of the meals so furnished is excludable under section 119 is determined by applying the rules of subparagraph (2) of this paragraph. If meals furnished for an unvarying amount are not furnished for the convenience of the employer in accordance with the rules of subparagraph (2) of this paragraph, the employee shall include in gross income the value of the meals regardless of whether the value exceeds or is less than the amount charged for such meals. In the absence of evidence to the contrary, the value of the meals may be deemed to be equal to the amount charged for them. Thus, under section 119, employees are not taxable on amounts charged for meals if four conditions exist: (1) The meals are furnished by the employer; (2) there is a charge for the meals which must be paid irrespective of whether the employee chooses to eat the meals and irrespective of how much he eats; (3) the meals are furnished for the convenience of the employer; and (4) the charge equals the value of the meals. The employer did not purchase and supervise the preparation of the meals in this case and did not withhold the charge from the compensation paid the petitioner. Yet, the employer furnished the facility for preparing the meals and required the employees to participate in the meals as a condition of their employment. In substance, there is no difference between this situation and the typical situation in which the employer directs the preparation of the meals. In addition, the employer required each employee to pay his assessed share of the costs of the meals, irrespective of whether, in fact, he was able to share in them, and there is no substantial difference between this situation and one in which the employer withholds the charge from the employee’s compensation initially. Although the petitioner may receive his customary pay without having the meal charge subtracted from it, he is required to pay his assessed share or forego his employment. There can be no question but that, if the meals were furnished in kind, they would qualify for the exclusion. During his tour of duty, the petitioner is not allowed to leave the fire station for personal purposes — not allowed to leave to eat elsewhere; he must remain available at all times to respond to emergency calls. Such circumstances satisfy the requirements concerning meals furnished for the convenience of the employer. Sec. 1.119-l(a)(2)(ii)(q), Income Tax Regs. Moreover, there is no evidence indicating that the value of the meals was different than the amounts charged for them. See sec. 1.119 — l(a)(3)(ii), Income Tax Regs. For these reasons, I would hold that the petitioner is entitled to the exclusion under section 119 for the charges assessed against him. I am concerned about the consequences of allowing the petitioner a deduction under section 162(a). The cost of his meals is a personal expenditure within the meaning of section 262, and it does not lose its personal nature even though it was required by the exigencies of his employment. See David I. Hitchcock, 66 T.C. 950 (1976), on appeal (4th Cir., Sept. 30, 1976); Richard Walter Drake, 52 T.C. 842 (1969); Louis Drill, 8 T.C. 902 (1947). If a deduction is allowed under section 162(a) for this personal expenditure, we may be launched down a slippery slope, and it may be difficult to find a rational basis for drawing a line in other cases involving personal expenditures. Dawson, Scott, Tannenwald, Featherston, and Wilbur, JJ., agree with this concurring opinion.