Problem 11-16 (LO. 2)

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Does the taxpayer recognize gross income in the following situations?

a. Ava is a filing clerk at a large insurance company. She is permitted to leave the premises for her lunch, but she usually eats in the company's cafeteria because it is quick and she is on a tight schedule. On average, she pays $2 for a lunch that would cost $12 at a restaurant; it cost her employer $10 to prepare. However, if the prices in the cafeteria were not so low and the food was not so delicious, she would probably bring her own lunch at a cost of $3 per day.

Ava's meals are provided as

a convenience for the employera convenience for the employeea convenience for the employee

. Therefore, Ava would include $fill in the blank 53463502b004068_2 per meal in her gross income.

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b. Scott is an executive for an international corporation located in New York City. Often he works late, taking calls from the company's European branch. Scott often stays in a company-owned condominium when he has a late-night work session. The condominium is across the street from the company office and has the technology needed to communicate with employees and customers throughout the world.

Because the lodging is provided as

a fringe benefita convenience for the employera convenience for the employeea fringe benefit

, Scott

is required to include the value of the lodgingis not required to include anythingis required to include the value of the lodging

in gross income.

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c. Ira recently moved to take a new job. For the first month on the new job, Ira was searching for a home to purchase or rent. During this time, his employer permitted Ira to live in an apartment that the company maintains for customers during the buying season. The month that Ira occupied the apartment was not during the buying season, however, and the apartment would not otherwise have been occupied.

The use of the apartment should qualifies as

a fringe benefita convenience for the employera no-additional-cost servicea convenience for the employer

and therefore is

included inexcluded fromincluded in

gross inco