J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

3.13 Employer-Furnished Meals or Lodging

The value of employer-furnished meals is not taxable if furnished on your employer’s business premises for the employer’s convenience. The value of lodging is not taxable if, as a condition of your employment, you must accept the lodging on the employer’s business premises for the employer’s convenience.

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Court Decision

House One Block Away

Two federal courts held that a school superintendent received tax-free lodging where the home was one block away from the school and separated by a row of other houses. This met the business premises test. The IRS announced that it would continue to litigate similar cases arising outside the Eighth Circuit in which the case arose. The Eighth Circuit includes the states of Arkansas, Iowa, Minnesota, Missouri, Nebraska, and North and South Dakota.

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Business premises test.

The IRS generally defines business premises as the place of employment, such as a company cafeteria in a factory for a cook or an employer’s home for a household employee. The Tax Court has a more liberal view, extending the area of business premises beyond the actual place of business in such cases as these:

• A house provided a hotel manager, although located across the street from the hotel. The IRS has agreed to the decision.
• A house provided a motel manager, two blocks from the motel. However, ...