Question 1. Adam repairs power lines for the Egret Utilities Comp

1. Adam repairs power lines for the Egret Utilities Company. He is generally working on a power line during the lunch hour. He must eat when and where he can and still get his work done. He usually purchases something at a convenience store and eats in his truck. Egret reimburses Adam for the cost of his meals.

a. Adam must include the reimbursement in his gross income.

b. Adam can exclude the reimbursement from his gross income since the meals are provided for the convenience of the employer.

c. Adam can exclude the reimbursement from his gross income because he eats the meals on the employer’s business premises (the truck).

d. Adam may exclude from his gross income the difference between what he paid for the meals and what it would have cost him to eat at home.

e. None of the above.

2. Tommy, a senior at State College, receives free room and board as full compensation for working as a resident advisor at the university dormitory. The regular housing contract is $2,000 a year in total, $1,200 for lodging and $800 for meals in the dormitory. Tommy had the option of receiving the meals or $800 in cash. Tommy accepted the meals. What must Tommy include in gross income from working as a resident advisor?

a. All items can be excluded from gross income as a scholarship.

b. The meals must be included in gross income.

c. The meals may be excluded because he did not receive cash.

d. The lodging must be included in gross income because it was compensation for services.

e. None of the above.

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