Question

Burger Store is located near many large office buildings, so at lunch it is extremely busy. Burger Store management previously permitted lunchtime employees a half-hour off-premises lunch break. However, employees could not easily return in a timely manner. Thus, a new policy was instituted to allow employees a 20-minute break for free lunch (only on the Burger Store premises). The company's accountant believes that the cost of these meals must be allocated to employees as additional compensation because the meals do not qualify as a nontaxable fringe benefit for employee discounts.
1. Should the cost of these meals be taxable or tax-free to employees?

Answer 1

Answer:

The cost of those meals should be tax-free to employees

Explanation:

The lateness of employees to their respective duties after lunch obviously affected business, negatively. This negative impacts of lateness were solved by lunch planning.

For convenience sake of the employer, employer paid meals were furnished within the business environment. Because employees were late from lunch, employer arranged free meals in order for employees to be on time from lunch.

As long as lateness has been reduced then their meals should be tax free.