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36 B.T.A. 838, 1937 WL 422 (B.T.A.)
(Cite as: 36 B.T.A. 838)
both the employer and employee shows in the performance of his duty, but its character
detail what petitioner's duties were and why for tax purposes was controlled by the
his residence in the hotel was necessary. dominant fact that the occupation of the
His duty was continuous and required his premises was imposed upon him for the
presence at a moment's call. He had a convenience of the employer. The Bureau
lifelong experience in hotel management of Internal Revenue has almost consistently
and operation in the United States, Canada, applied the same doctrine in its published
and elsewhere, and testified that the rulings.FN3
functions of the manager could not *840
have been performed by one living outside The three cases cited by the respondent,
the hotel, especially a resort hotel such as Ralph Kitchen, 11 B.T.A. 855; Charles A.
this. The demands and requirements of Frueauff, 30 B.T.A. 449; and Fontaine Fox,
guests are numerous, various, and 30 B.T.A. 451, are distinguishable entirely
unpredictable, and affect the meals, the upon the ground that what the taxpayer
rooms, the entertainment, and everything received was not shown to be primarily for
else about the hotel. The manager must be the need or convenience of the employer.
alert to all these things day and night. He Of course, as in the Kitchen case, it can not
would not consider undertaking the job and be said as a categorical proposition of law
the owners of the hotel would not consider that, where an employee is fed and lodged
employing a manager unless he lived there. by his employer, no part of the value of such
This was implicit throughout his perquisite is income. If the Commissioner
employment, and when his compensation finds that it was received as compensation
was changed from time to time no mention and holds it to be taxable income, the
was ever made of it. Both took it for taxpayer contesting this before the Board
granted. The corporation's books carried no must prove by evidence that it is not income.
accounting for the petitioner's meals, rooms, In the Kitchen case the Board held that the
or service. evidence did not establish that the food and
lodging *841 were given for the
Under such circumstances, the value of convenience of the employer. In the
meals and lodging is not income to the present case the evidence clearly establishes
employee, even though it may relieve him of that fact, and it has been so found.
an expense which he would otherwise bear.
In Jones v. United States, supra, the subject The determination of the Commissioner on
was fully considered in determining that the point in issue is reversed.
neither the value of quarters nor the amount
received as commutation of quarters by an Reviewed by the Board.
Army officer in included within his taxable
income. There is also a full discussion in Judgment will be entered under Rule 50.
the English case of Tennant v. Smith, H. L.
(1892) App.Cas. 150, III British Tax Cases MURDOCK concurs only in the result.
158.FN2 A bank employee was required to ARNOLD, dissenting:
live in quarters located in the bank building, I disagree with the conclusions of fact that
and it was held that the value of such the suite of rooms and meals furnished
lodging was not taxable income. The petitioner and his wife at the Royal
advantage to him was merely an incident of Hawaiian Hotel were entirely for the
convenience of the employer and that the from the time he first accepted the
cash salary was fixed without reference employment down through the years before
thereto and was never regarded as part of his us. His wife performed no services for the
compensation. hotel company.