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?

Question

Quizplus · Accepted Answer

The value of the meals must be included in Tommy's gross income, as it is a form of compensation for his work as a resident advisor. The fact that he chose meals instead of cash does not change the taxability of this compensation. The lodging may also need to be included in gross income depending on the circumstances, but it is not explicitly stated in the question whether Tommy is required to include it.

Tommy, a Senior at State College, Receives Free Room and Board