Stephanie Keri Case Study
Mayor Tax Research
Stephanie Keri has just been elected the new mayor of St. Augustine. The city provides a furnished house for Stephanie Keri and her family to live in. The real estate has a value of $60,000 per year and all the maintenance fees are paid by the city. The tax question Stephanie needs answered is whether the $60,000 rent benefit is included in her taxable income.
To begin my research I first went to the tax regulations to see the requirements the internal revenue service established for matters regarding lodging and exclusions. The regulation sec.1.119-1(b), specifies that in order for an employee to not include housing from their gross income three test must be met. The mayor meets the first requirement by living on the employer’s premise. Additionally, the next requirement is that the employer must provide housing for the employer’s convenience. This requirement is fulfilled by the mayor living on property allowing her to throw social gatherings that are a requirement for being in social office. Finally, as a condition of her employment Stephanie must live on property to satisfy the …show more content…
For example, Canal Zone police officer Ronald Benninghoff was required to live in government owned housing during the duration of his job. The value of the housing was included in the police officer’s income. When appealed the tax court affirmed its decision that officer Benninghoff cannot exclude housing from his gross income ([80-1 USTC ¶9311] Ronald W. Benninghoff, Petitioner-Appellant v. Commissioner of Internal Revenue, Respondent-Appellee). The appellant court cited that police officer Benninghoff failed to show a direct substantial relationship between the provisions of lodging and the law enforcement interests to his employer. In other words, Mayor Keri can overcome this stipulation by proving she uses her housing for town obligations and less for her personal
Stephanie Keri has just been elected the new mayor of St. Augustine. The city provides a furnished house for Stephanie Keri and her family to live in. The real estate has a value of $60,000 per year and all the maintenance fees are paid by the city. The tax question Stephanie needs answered is whether the $60,000 rent benefit is included in her taxable income.
To begin my research I first went to the tax regulations to see the requirements the internal revenue service established for matters regarding lodging and exclusions. The regulation sec.1.119-1(b), specifies that in order for an employee to not include housing from their gross income three test must be met. The mayor meets the first requirement by living on the employer’s premise. Additionally, the next requirement is that the employer must provide housing for the employer’s convenience. This requirement is fulfilled by the mayor living on property allowing her to throw social gatherings that are a requirement for being in social office. Finally, as a condition of her employment Stephanie must live on property to satisfy the …show more content…
For example, Canal Zone police officer Ronald Benninghoff was required to live in government owned housing during the duration of his job. The value of the housing was included in the police officer’s income. When appealed the tax court affirmed its decision that officer Benninghoff cannot exclude housing from his gross income ([80-1 USTC ¶9311] Ronald W. Benninghoff, Petitioner-Appellant v. Commissioner of Internal Revenue, Respondent-Appellee). The appellant court cited that police officer Benninghoff failed to show a direct substantial relationship between the provisions of lodging and the law enforcement interests to his employer. In other words, Mayor Keri can overcome this stipulation by proving she uses her housing for town obligations and less for her personal