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U.S. Supreme Court

Commissioner v. Kowalski, 434 U.S. 77 (1977)

Commissioner of Internal Revenue v. Kowalski

No. 76-1095

Argued October 12, 1977

Decided November 29, 1977

434 U.S. 77


New Jersey provides a cash meal allowance for its state police troopers, which is paid biweekly in advance in an amount varying with the trooper's rank and is included, although separately stated, with his salary and in his gross pay for purposes of calculating pension benefits. Although troopers are required to remain on call in their assigned patrol areas during their midshift break, they are not required to eat lunch at any particular location, and indeed may eat at home, nor are they required to spend the meal allowance on food. No reduction in the allowance is made for periods when a trooper is not on patrol. Respondents, a trooper and his wife, included only a part of the meal allowances received by the trooper in their 1970 federal income tax return, and the Commissioner assessed a deficiency with respect to the remainder. The respondents argued in the Tax Court that the allowance was not income within § 61(a) of the Internal Revenue Code of 1954, which defines gross income as "all income from whatever source derived, including (but not limited to) . . . (1) Compensation for services, including fees, commissions, and similar items." In the alternative, they argued that the allowances were excludable from § 61 income because of § 119 of the Code, which creates an exclusion for

"the value of any meals . . . furnished to [an employee] by his employer for the convenience of the employer, but only if . . . the meals are furnished on the business premises of the employer,"

and further provides that,

"[in] determining whether meals are furnished . . . for the convenience of the employer, the provisions of an employment contract or of a State statute fixing terms of employment shall not be determinative of whether the meals . . . are intended as compensation."

The Tax Court rejected both contentions, but the Court of Appeals reversed.


1. In the absence of a specific exemption, the cash meal allowance payments are included in gross income under § 61(a), since they are "undeniabl[y] accessions to wealth, clearly realized, and over which the [trooper has] complete dominion." Commissioner v. Glenshaw Glass Co., 348 U. S. 426, 348 U. S. 431. Pp. 434 U. S. 82-84.

2. The payments are not subject to exclusion from gross income under

Page 434 U. S. 78

§ 119, since § 119, by its terms, covers meals furnished by the employer, and not cash reimbursements for meals. P. 434 U. S. 84.

3. No specific exemption for the payments can be claimed on the basis of the once-recognized doctrine that benefits conferred by an employer on an employee "for the convenience of the employer" are not income within the meaning of the Internal Revenue Code, since it appears from the legislative history of § 119 that it was intended comprehensively to modify the prior law, both expanding and contracting the exclusion for meals previously provided, and therefore it must be construed as a replacement for the prior law, designed to end the confusion that had developed respecting the "convenience of the employer" doctrine as a determinant of the tax status of meals. Pp. 434 U. S. 84-95.

544 F.2d 686, reversed.

BRENNAN, J., delivered the opinion of the Court, in which STEWART, WHITE, MARSHALL, POWELL, REHNQUIST, and STEVENS, JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which BURGER, C.J.,joined, post, p. 434 U. S. 96.

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