stances I do not believe it makes any difference whether the amount paid to petitioner was intended as additional compensation or was made to in some way accommodate the employer. It is taxable income under section 61 unless specifically excluded under some other provision in the Code.

But I respectfully disagree with the majority in its conclusion that the cost of petitioner's meals are deductible only to the extent that they are eaten while away from home overnight, under section 162(a)(2). In my opinion petitioner's cost of meals eaten while on active duty under circumstances which made him subject to call at all times should be considered ordinary and necessary expenses of his business of being a State trooper, deductible under section 162(a) to the extent he can substantiate the expenditures for that purpose. In other words I would not consider these to be travel expenses, but rather to be ordinary and necessary expenditures required as a part of petitioner's duties, for the convenience of his employer.

"Over the years we have held on more than one occasion that a taxpayer may be in the trade or business of being an employee.' David J. Primuth, 54 T.C. 374, 377 (1970). Thus, I conclude that petitioner's status as a New Jersey State trooper rose to the dignity of being a trade or business. In addition, I do not perceive the problem presented here to be whether petitioner's meal expenses may be characterized as "ordinary and necessary" within the meaning of section 162(a). I assume that the expenses were "necessary" in the sense of being "appropriate and helpful," and that they were "ordinary" in the context of "life in all its fulness," Welch v. Helvering, 290 U.S. 111, 113, 114-115 (1933).

The inquiry here is whether sufficient nexus existed between these expenses and the "carrying on" of petitioner's trade or business to qualify them for deduction under section 162(a), or whether they were in essence personal or living expenses and nondeductible by virtue of section 262, cf. Louis Drill, 8 T.C. 902 (1947). I consider the expenses to have a dual character, partly business and partly personal, and their tax treatment depends upon which aspect outweighs the other. Cf. George A. Papineau, 16 T.C. 130, 131 (1951).

I think it is clear that the circumstances under which petitioner was required to take his meals were established for a substantial noncompensatory business reason of the employer in order to have petitioner and other State troopers available for

emergency call during the meal period. It is equally clear from the record that emergencies were reasonably expected to occur, and actually did occur, which required petitioner to perform his job during his meal period. In addition the record indicates that a substantial motive of petitioner's employer in regulating its employees' meals was to reduce markedly the amount of time its employees used for eating, so that the employees would have more time to devote to their duties.

In sum, under the narrow circumstances before us, I find that petitioner has made a sufficient showing of business necessity for eating his meals on the job to take his expenses therefor out of the ambit of section 262 and to qualify them for a deduction under section 162(a). As said in Arthur Benaglia, 36 B.T.A. 838 (1937), the meals were not eaten on the job for petitioner's "personal convenience, comfort, or pleasure, but solely because he could not otherwise perform the services required of him." I find that the eating of his meals while on duty and at the site of his duty was a necessary and required part of this petitioner's business and the cost of those meals was an ordinary and necessary expense of his business. The fact that personal needs of petitioner were also satisfied was an incident of his business. Cf. Gunnar Van Rosen, 17 T.C. 834, 838 (1951).

I believe the allowance of deductions to employees of amounts they can prove were spent for meals taken, of necessity, on the job is more compatible with the structure of our taxing system than the exclusion from income of the entire allowance received for subsistence. This finds support in section 62(2)(A) of the 1954 Code which, in defining "adjusted gross income," permits an employee to deduct from gross income the deductions allowed by part VI (which includes section 162(a)) "which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer."

I recognize that my conclusion may be inconsistent with the conclusions of this Court on this point in Charles H. Hyslope, 21 T.C. 131 (1953), and Robert H. Saunders, 21 T.C. 630 (1954), reversed by the Third Circuit, supra. However, I think there have been enough changes in the approach to the deductibility of employee expenses since those cases were decided to justify taking

another look at the application of our conclusions to the particular factual situation here involved.

STERRETT, J., dissenting: It has long been recognized by Congress that all amounts paid by an employer to, or on behalf of, an employee are not includable in the gross income of the employee. Secs. 101, 105, 106, 107, 112, 113, 117, and 119. Such specific exclusions are not exhaustive. Rudolph v. United States, 370 U.S. 269, 274 (1962).

The courts have long agreed that everything of value received by an employee from his employer does not represent income. Clifford D. Jones v. United States, 60 Ct. Cl. 552 (1925) (quarters allowance for Army officer); Bercaw v. Commissioner, 165 F. 2d 521 (4th Cir. 1948) (quarters allowance for Army officer); Saunders v. Commissioner, 215 F. 2d 768 (3d Cir. 1954) (meal allowance for State police); Diamond v. Sturr, 221 F. 2d 264 (2d Cir. 1955) (food and lodging to employee while on duty at mental institution); United States v. Barrett, 321 F. 2d 911 (5th Cir. 1963) (meal allowance for State trooper); United States v. Gotcher, 401 F. 2d 118 (5th Cir. 1968) (expense paid trip to Germany); Arthur Benaglia, 36 B.T.A. 838 (1937) (meal and lodging for hotel manager); John E. Cavanagh, 36 T.C. 300 (1961) (reimbursement for food and lodging incurred because of move).

It is worth noting that all of the above cases reach the identical conclusion, that the item of value did not represent income to the recipient, based upon an analysis of section 61, or its predecessor section 22(a) of the 1939 Code, and not upon any specific exclusionary provision. It is also worth noting that, while some of the cases cited above involve payment in kind and some payment in cash, the form of payment is not controlling. Any distinction. based upon this distinction was rejected by the Saunders case: Admittedly, the payment of cash to an employee is normally compensatory and probably more obviously so than a payment in kind. Nevertheless, just as an employee is often furnished tangible property which cannot be regarded as compensation, an employee may be furnished cash which is not compensation. [215 F.2d at 771.]

The respondent himself, as early as his Regs. 45 which were in effect in 1920, ruled in article 33 thereof that living quarters furnished an employee for the convenience of the employer did

not represent income. During this period the Revenue Service had held that in varying situations amounts furnished to employees in cash or in kind need not be included in their respective gross incomes.1

In 1940 the regulations promulgated earlier were amended in relevant part to read as follows:

If a person receives as compensation for services rendered a salary and in addition thereto living quarters or meals, the value to such person of the quarters and meals so furnished constitutes income subject to tax. If, however, living quarters or meals are furnished to employees for the convenience of the employer, the value thereof need not be computed and added to the compensation otherwise received by the employees. [T.C. 4965, 1940-1 C.B. 13, 14.]

This regulation was interpreted by the respondent in later publications in which he explained that the "convenience of the employer" rule should not be applied in those situations in which it is evident from the other circumstances that the receipt of the quarters and meals represented additional compensation, and that the rule would be met if they were required to be accepted by an employee so that he could properly perform his duties. Mim. 5023, 1940-1 C.B. 14; Mim. 6472, 1950-1 C.B. 15.

The common theme, the rationale for all the foregoing exclusions, is that amounts paid to an employee for the convenience of the employer and not intended to be compensatory are not includable in income. For this cause of action to come within this framework we believe the determination that must be made is whether the meal allowance was furnished to the petitioner for his services or whether it was furnished to him so that he would eat in the manner prescribed. See Clifford D. Jones v. United States, supra at 570. If, after a review of the evidence in the record, the latter determination prevails, the amounts furnished should not be included in gross income.

The court in Saunders was faced with facts, as the majority has noted, "not substantially different from those involved in the instant case." Using language from respondent's own explanation

1 See O.D. 11, 1 C.B. 66 (1919), an American Red Cross volunteer receiving maintenance should report as income only the excess, if any of the maintenance allowance over actual living expenses; O.D. 265, 1 C.B. 71 (1919), “Board and lodging furnished seamen in addition to their cash compensation is *** supplied for the convenience of the employer and [its] value *** is not required to be reported in such employees' income tax returns"; O.D. 514, 2 C.B. 90 (1920), "Supper money" paid to an employee who performs extra labor after regular business hours for the convenience of the employer does not represent additional taxable income.

of the regulations it said: 2

Since it is not "evident" to us that the rations allowance was furnished as compensation, we should next determine, as indicated by Mimeo 5023, whether Saunders was "required to accept such *** meals in order to perform properly his duties" and thus whether the rations allowance was furnished for the convenience of the employer so as not to be taxable. *** [215 F. 2d at 774.] The court then went on to find that the meal allowance was so furnished and excluded it from gross income.

It is a historical fact that New Jersey provided its troopers with meals before switching to the meal allowance program. This decision was based on the hard realities of economics and efficiency. The majority opinion has made a finding of fact that "The meal allowance was not intended to represent additional compensation," 3 leaving as the sole determining factor whether the meal allowance was paid to the petitioner for the convenience of the employer.

Police are engaged in a unique occupation, one that deals with public safety-a line of work that by its very nature breeds emergencies at any time of day or night. The interests of the employer, the State, in furtherance of its responsibility for the public safety, demand that it require its troopers to eat when, where, and for a duration that does not jeopardize the employer's responsibility to the public. The State adopted the meal allowance system to assist it in carrying out this responsibility. Surely this decision is within the employer's prerogative. See also United States v. Keeton, 256 F. Supp. 576, 580 (1966), affd. per curiam 383 F.2d 429 (10th Cir. 1967); sec. 1.119-1(a)(2)(ii)(C), Income Tax Regs.

It is difficult to conceive of a situation where an employee must so clearly take his meals at the convenience of his employer. This conclusion with respect to the convenience of the employer is supported by the discussions in Barrett v. United States, supra; United States v. Morelan, 356 F. 2d 199 (8th Cir. 1966); United States v. Keeton, supra; and Tony M. Smith v. United States, (N.D. Miss. 1974, 35 AFTR 2d 75-345, 75-1 USTC par. 9184),

* See also the Fifth Circuit's statement in United States v. Barrett, 321 F. 2d 911, 913: "We find ourselves in accord with Saunders: the 'convenience of the employer' test is the key criterion in determining whether or not payments are income.

In this connection compare Stephen L. Zolnay, 49 T.C. 389, 396 (1968), where in the context of the exclusion for scholarship authorized by sec. 117 the issue was stated "Was the taxpayer paid to work or paid to study?"