Facts
The facts are stipulated as follows;
CJ hospital has a cafeteria that closes at 8:00 pm and a privately owned sandwich shop, Subway operating 24 hours on its premises.
The hospital provides meal vouchers to all its 240 medical employees to be redeemed at the cafeteria or Subway. This voucher is meant to be used when the employees are on call in case of an emergency.
In any other event, the hospital employees are not required to be on or near the cafeteria or the Subway premises during meal hours. However, the employees are generally at the premises at meal hours.
Issues
CJ hospital provides meal vouchers to each of the 240 medical employees with the intention of keeping the employees on call in case of an emergency. The meal vouchers are not intended to be used at any other given time. These meals are furnished by CJ hospital without a charge for a non-compensatory business reason of keeping medical employees on call.
CJ hospital furnishes meals at its own premises to enable employees to remain at work during emergency working ours. When the employer furnishes meals at his or her business premises during the working hours of …show more content…
Kowalski [77-2 USTC] case, the Supreme Court held that section 119 only covers meals furnished by the employer on the business premises at the employer’s convenience but does not cover cash reimbursement for the meals. Further the court held that section 119 requires employees to accept such meals to properly perform their duties. Accordingly, CJ hospital can continue furnishing the meal vouchers to allow employees remain at the hospital’s premises in times of an emergency. The value of the meal vouchers is deductible from all the 246 employees’ income regardless of the mere fact that an employee might not accept the meal vouchers and instead require the hospital to include the value of the meal voucher to his or her