LO.2 Does the taxpayer recognize gross income in the following situations?

a. Ann is a registered nurse working in a community hospital. She is not required to take her lunch on the hospital premises, but she can eat in the cafeteria at no charge.

The hospital adopted this policy to encourage employees to stay on the premises and be available in case of emergencies. During the year, Ann ate most of her meals on the premises. The total value of those meals was $1,250.

b. Ira is the manager of a hotel. His employer will allow him to live in one of the rooms rent-free or receive a $1,800 per month cash allowance for rent. Ira elected to live in the hotel.

c. Seth is a forest ranger and lives in his employer’s cabin in the forest. He is required to live there, and because there are no restaurants nearby, the employer supplies Seth with groceries that he cooks and eats on the premises.

d. Rocky is a partner in the BAR Ranch (a partnership). He is the full-time manager of the ranch. BAR has a business purpose for Rocky’s living on the ranch.