Morris is the manager of a motel. As a condition of his employment, Morris is required to live in a room on the premises so that he would be there in case of emergencies. Morris considered this a fringe benefit, since he would otherwise be required to pay $600 per month rent. The room that Morris occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Morris is required to include in gross income.

Morris is the manager of a motel. As a condition of his employment, Morris is required to live in a room on the premises so that he would be there in case of emergencies. Morris considered this a fringe benefit, since he would otherwise be required to pay $600 per month rent. The room that Morris occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Morris is required to include in gross income.

Morris is the manager of a motel. As a condition of his employment, Morris is required to live in a room on the premises so that he would be there in case of emergencies. Morris considered this a fringe benefit, since he would otherwise be required to pay $600 per month rent. The room that Morris occupied normally rented for $60 per night, or $1,500 per month. On the average, 90% of the motel rooms were occupied. As a result of this rent-free use of a room, Morris is required to include in gross income.


a. $1,500 per month.

b. $0.

c. $1,350 ($1,500 × .90 = $1,350).

d. $600 per month.

e. None of these choices are correct.


Answer: b. $0 because it is for the convenience of the employer


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