Taxation – Federal Income Tax – Meals and Lodging Under the 1954 Code
Before discussing the application of the 1954 Internal Revenue Code with regard to the taxability of meals and lodging furnished an employee by his employer, several fundamental tax concepts should be examined. The first of these involves the definition of gross income, which for many years has been cast in broad statutory language. For example, section 22(a) of the 1939 Internal Revenue Code provided that gross income includes ” … gains, profits, and income derived from salaries, wages, or compensation for personal service … of whatever kind and in whatever form paid …. ” Comprehensive as these terms appear, gross income has not been interpreted to include all forms of economic benefits received by a taxpayer. Traditionally, for reasons both of policy and administration, the net use value of goods and services owned and used by a taxpayer for his own benefit had been excluded. Similarly, the differential value of improved working conditions is not generally considered to give rise to taxable income. Although better working conditions may have economic value in the eyes of an employee and can exert substantial in influence on the rates of ordinary compensation, most non-cash benefits in this sphere have been tax exempt. The main problems, however, have not arisen in the theoretical definition of income but in classifying particular fact situations. Under what circumstances should the value of meals and lodging furnished by an employer to his employees be excluded?