Groceries Vs Commissary Case Summary

As previously stated, Section 119(a) employees exclude the value of meals that they receive from their employer if the meals are provided on the business’s property. One of the major issues that must be discussed is whether or not groceries are the same as meals. Two court cases concerning this issue have been decided; however, they reach different conclusions. The first case discusses a situation where the court ruled that groceries were not considered meals. In Tougher, the taxpayer worked for the FAA and was stationed on an island in the middle of the Pacific Ocean. The employees have the option to either eat in the dining hall or buy groceries from the commissary, which was similar to a supermarket. If an employee chose to eat from at the dining hall, the cost of the meal would be deducted from his or her pay. If an employee chose to buy food from the commissary, he or she would pay with cash. The

Because of the nature of his job, the taxpayer must be available at all times in case of an emergency. Therefore, the taxpayer’s employer provided the taxpayer with free housing and groceries from the organization’s commissary in order to make it easier for the taxpayer to be on-call. The taxpayer did not include the value of these benefits and the IRS subsequently determined that the value of the groceries should be included in gross income because they do not qualify as meals under Section 119. The court ruled that the groceries qualified as meals because they were provided to the taxpayer by his employer on the organization’s premises and for the convenience of the employer because it allowed the taxpayer to be available to work at any time. The court opposed the ruling in Tougher because meals should be considered “ready-to-eat servings of food”, which includes groceries and because the facts in the case meet the “convenience of the employer”