Tax Accounting

For each of the following situations, determine whether or not the fringe benefit is includible in or excludible from gross income.

Situation A

Harold is the manager of a motel. As a condition of his employment, Harold is required to live in a room on the premises so that he will be there in case of emergencies. Harold considers this a fringe benefit, since he would otherwise be required to pay $550 per month rent. The room that Harold occupies normally rents for $55 per night, or $1,500 per month. On the average, 90% of the motel rooms are occupied.

Situation B

Ivan repairs power lines for Friendly Utilities Company. He is generally working on a power line during the lunch hour. He must eat when and where he can and still get his work done. He usually purchases something at a convenience store and eats in his truck. The utilities company reimburses Ivan for the cost of his meals.

Situation C

Employers of Jays Bowling Alley, Inc. allow their employees to bowl without charge after the employees working hours and when there are adequate idle bowling lanes. Kevin bowled 7 games during the month at no charge when the non-employee charge was $3.00 per game.