26 U.S.C. § 119 — Meals or lodging furnished for the conven-

Page 572 TITLE 26—INTERNAL REVENUE CODE § 119 EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–589 applicable to trans- actions which occur after Dec. 31, 1980, other than transactions which occur in a proceeding in a bank- ruptcy case or similar judicial proceeding or in a pro- ceeding under Title 11 commencing on or after Dec. 31, 1980, with an exception permitting the debtor to make the amendment applicable to transactions occurring after Sept. 30, 1979, in a specified manner, see section 7(a)(1), (f) of Pub. L. 96–589, set out as a note under sec- tion 108 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title III, § 364(b), Nov. 6, 1978, 92 Stat. 2854, provided that: ‘‘The amendments made by this section [amending this section] shall apply to contribu- tions made after January 31, 1976.’’ EFFECTIVE DATE OF 1976 AMENDMENT Pub. L. 94–455, title XXI, § 2120(c), Oct. 4, 1976, 90 Stat. 1913, provided that: ‘‘The amendments made by this section [amending this section and section 362 of this title] apply to contributions made after January 31, 1976.’’ § 119. Meals or lodging furnished for the conven- ience of the employer (a) Meals and lodging furnished to employee, his spouse, and his dependents, pursuant to em- ployment There shall be excluded from gross income of an employee the value of any meals or lodging furnished to him, his spouse, or any of his de- pendents by or on behalf of his employer for the convenience of the employer, but only if— (1) in the case of meals, the meals are fur- nished on the business premises of the em- ployer, or (2) in the case of lodging, the employee is re- quired to accept such lodging on the business premises of his employer as a condition of his employment. (b) Special rules For purposes of subsection (a)— (1) Provisions of employment contract or State statute not to be determinative In determining whether meals or lodging 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 or lodging are intended as compensa- tion. (2) Certain factors not taken into account with respect to meals In determining whether meals are furnished for the convenience of the employer, the fact that a charge is made for such meals, and the fact that the employee may accept or decline such meals, shall not be taken into account. (3) Certain fixed charges for meals (A) In general If— (i) an employee is required to pay on a periodic basis a fixed charge for his meals, and (ii) such meals are furnished by the em- ployer for the convenience of the em- ployer, there shall be excluded from the employee’s gross income an amount equal to such fixed charge. (B) Application of subparagraph (A) Subparagraph (A) shall apply— (i) whether the employee pays the fixed charge out of his stated compensation or out of his own funds, and (ii) only if the employee is required to make the payment whether he accepts or declines the meals. (4) Meals furnished to employees on business premises where meals of most employees are otherwise excludable All meals furnished on the business premises of an employer to such employer’s employees shall be treated as furnished for the conven- ience of the employer if, without regard to this paragraph, more than half of the employ- ees to whom such meals are furnished on such premises are furnished such meals for the con- venience of the employer. (c) Employees living in certain camps (1) In general In the case of an individual who is furnished lodging in a camp located in a foreign country by or on behalf of his employer, such camp shall be considered to be part of the business premises of the employer. (2) Camp For purposes of this section, a camp con- stitutes lodging which is— (A) provided by or on behalf of the em- ployer for the convenience of the employer because the place at which such individual renders services is in a remote area where satisfactory housing is not available on the open market, (B) located, as near as practicable, in the vicinity of the place at which such indi- vidual renders services, and (C) furnished in a common area (or en- clave) which is not available to the public and which normally accommodates 10 or more employees. (d) Lodging furnished by certain educational in- stitutions to employees (1) In general In the case of an employee of an educational institution, gross income shall not include the value of qualified campus lodging furnished to such employee during the taxable year. (2) Exception in cases of inadequate rent Paragraph (1) shall not apply to the extent of the excess of— (A) the lesser of— (i) 5 percent of the appraised value of the qualified campus lodging, or (ii) the average of the rentals paid by in- dividuals (other than employees or stu- dents of the educational institution) dur- ing such calendar year for lodging pro- vided by the educational institution which is comparable to the qualified campus lodging provided to the employee, over (B) the rent paid by the employee for the qualified campus lodging during such cal- endar year. Page 573 TITLE 26—INTERNAL REVENUE CODE § 119 The appraised value under subparagraph (A)(i) shall be determined as of the close of the cal- endar year in which the taxable year begins, or, in the case of a rental period not greater than 1 year, at any time during the calendar year in which such period begins. (3) Qualified campus lodging For purposes of this subsection, the term ‘‘qualified campus lodging’’ means lodging to which subsection (a) does not apply and which is— (A) located on, or in the proximity of, a campus of the educational institution, and (B) furnished to the employee, his spouse, and any of his dependents by or on behalf of such institution for use as a residence. (4) Educational institution, etc. For purposes of this subsection— (A) In general The term ‘‘educational institution’’ means— (i) an institution described in section 170(b)(1)(A)(ii) (or an entity organized under State law and composed of public in- stitutions so described), or (ii) an academic health center. (B) Academic health center For purposes of subparagraph (A), the term ‘‘academic health center’’ means an entity— (i) which is described in section 170(b)(1)(A)(iii), (ii) which receives (during the calendar year in which the taxable year of the tax- payer begins) payments under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (relating to graduate medical education), and (iii) which has as one of its principal pur- poses or functions the providing and teach- ing of basic and clinical medical science and research with the entity’s own faculty. (Aug. 16, 1954, ch. 736, 68A Stat. 39; Pub. L. 95–427, § 4(a), Oct. 7, 1978, 92 Stat. 997; Pub. L. 95–615, title II, § 205, Nov. 8, 1978, 92 Stat. 3107; Pub. L. 96–222, title I, § 108(a)(1)(G), Apr. 1, 1980, 94 Stat. 225; Pub. L. 97–34, title I, § 113, Aug. 13, 1981, 95 Stat. 195; Pub. L. 99–514, title XI, § 1164(a), Oct. 22, 1986, 100 Stat. 2511; Pub. L. 100–647, title I, § 1011B(d), Nov. 10, 1988, 102 Stat. 3489; Pub. L. 104–188, title I, § 1123(a), Aug. 20, 1996, 110 Stat. 1768; Pub. L. 105–206, title V, § 5002(a), July 22, 1998, 112 Stat. 788.) Editorial Notes REFERENCES IN TEXT Section 1886(d)(5)(B) or (h) of the Social Security Act, referred to in subsec. (d)(4)(B)(ii), is classified to sec- tion 1395ww(d)(5)(B) or (h) of Title 42, The Public Health and Welfare. AMENDMENTS 1998—Subsec. (b)(4). Pub. L. 105–206 added par. (4). 1996—Subsec. (d)(4). Pub. L. 104–188 amended par. (4) generally. Prior to amendment, par. (4) read as follows: ‘‘EDUCATIONAL INSTITUTION.—For purposes of this para- graph, the term ‘educational institution’ means an in- stitution described in section 170(b)(1)(A)(ii).’’ 1988—Subsec. (d). Pub. L. 100–647 struck out ‘‘(as of the close of the calendar year in which the taxable year begins)’’ after ‘‘appraised value’’ in par. (2)(A)(i) and in- serted at end ‘‘The appraised value under subparagraph (A)(i) shall be determined as of the close of the cal- endar year in which the taxable year begins, or, in the case of a rental period not greater than 1 year, at any time during the calendar year in which such period be- gins.’’ as concluding provision. 1986—Subsec. (d). Pub. L. 99–514 added subsec. (d). 1981—Subsec. (c). Pub. L. 97–34 added subsec. (c). 1980—Subsec. (a). Pub. L. 96–222 struck out ‘‘General rule’’ in subsec. (a) as in effect on the day before the date of enactment of the Foreign Earned Income Act of 1978 to correct a legislative oversight in the amend- ment of subsec. (a) of this section by section 205 of Pub. L. 95–615. The amendment by Pub. L. 95–615, however, was executed without reference to ‘‘General rule’’ as the probable intent of Congress, thereby requiring no change in text. 1978—Subsec. (a). Pub. L. 95–615 designated existing provisions as subsec. (a), added subsec. (a) heading, and substituted ‘‘furnished to him, his spouse, or any of his dependents by or on behalf of his employer for the con- venience of the employer’’ for ‘‘furnished to him by his employer for the convenience of the employer’’. Pub. L. 95–427 inserted provisions relating to factors not taken into account with respect to meals and cer- tain fixed charges for meals. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105–206, title v, § 5002(b), July 22, 1998, 112 Stat. 789, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to tax- able years beginning before, on, or after the date of the enactment of this Act [July 22, 1998].’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–188, title I, § 1123(b), Aug. 20, 1996, 110 Stat. 1768, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to taxable years beginning after December 31, 1995.’’ EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XI, § 1164(b), Oct. 22, 1986, 100 Stat. 2511, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to tax- able years beginning after December 31, 1985.’’ EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–34 applicable with respect to taxable years beginning after Dec. 31, 1981, see sec- tion 115 of Pub. L. 97–34, set out as a note under section 911 of this title. EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96–222 effective as if included in the Foreign Earned Income Act of 1978, Pub. L. 95–615, see section 108(a)(2)(A) of Pub. L. 96–222, set out as a note under section 3 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–427, § 4(b), Oct. 7, 1978, 92 Stat. 998, provided that: ‘‘The amendment made by subsection (a) [amend- ing this section] shall apply with respect to taxable years beginning after December 31, 1953, and ending after August 16, 1954.’’ EFFECTIVE DATE OF 1978 AMENDMENT; ELECTION OF PRIOR LAW Amendment by Pub. L. 95–615 applicable to taxable years beginning after Dec. 31, 1977, with provision for Page 574 TITLE 26—INTERNAL REVENUE CODE [§ 120 election of prior law, see section 209 of Pub. L. 95–615, set out as a note under section 911 of this title. STATUTE OF LIMITATIONS Pub. L. 96–605, title I, § 107(b), Dec. 28, 1980, 94 Stat. 3524, provided that: ‘‘In the case of any allowance re- ceived during calendar year 1974, 1975, 1976, or 1977, sub- sections (a)(2) and (e) of such section 3 [section 3 of Pub. L. 95–427, set out below] shall be applied by sub- stituting the date one year after the date of the enact- ment of this Act [Dec. 28, 1980] for ‘April 15, 1979’ each place it appears.’’ TREATMENT OF CERTAIN STATUTORY SUBSISTENCE AL- LOWANCES OR SUBSISTENCE ALLOWANCES NEGOTIATED IN ACCORDANCE WITH STATE LAW RECEIVED BY STATE POLICE OFFICERS BEFORE JANUARY 1, 1978 Pub. L. 95–427, § 3, Oct. 7, 1978, 92 Stat. 996, as amended by Pub. L. 96–605, title I, § 107(a), Dec. 28, 1980, 94 Stat. 3524; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, pro- vided that: ‘‘(a) GENERAL RULE.—If— ‘‘(1) an individual who was employed as a State po- lice officer received a statutory subsistence allow- ance or a subsistence allowance negotiated in accord- ance with State law while so employed, ‘‘(2) such individual elects, on or before April 15, 1979, and in such manner and form as the Secretary of the Treasury may prescribe, to have this section apply to such allowance, and ‘‘(3) this section applies to such allowance, then, for purposes of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], such allowance shall not be in- cluded in such individual’s gross income. ‘‘(b) ALLOWANCES TO WHICH SECTION APPLIES.—For purposes of this section, this section applies to any statutory subsistence allowance or subsistence allow- ance negotiated in accordance with State law which was received— ‘‘(1) after December 31, 1969, and before January 1, 1974, to the extent such individual did not include such allowance in gross income on his income tax re- turn for the taxable year in which such allowance was received, or ‘‘(2) during the calendar year 1974, 1975, 1976, or 1977. ‘‘(c) OTHER DEFINITIONS.—For purposes of this sec- tion— ‘‘(1) STATE POLICE OFFICER.—The term ‘State police officer’ means any police officer (including a highway patrolman) employed by a State (or the District of Columbia) on a full-time basis with the power to ar- rest. ‘‘(2) INCOME TAX RETURN.—The term ‘income tax re- turn’ means the return of the taxes imposed by sub- title A of the Internal Revenue Code of 1986. If an in- dividual filed before November 29, 1977, an amended return for any taxable year, such amended return shall be treated as the return for such taxable year. ‘‘(d) LIMITATION ON DEDUCTION.—If any individual re- ceives a subsistence allowance which is excluded from gross income under subsection (a), no deduction shall be allowed under any provision of chapter 1 of the In- ternal Revenue Code of 1986 for expenses in respect of which he has received such allowance, except to the ex- tent that such expenses exceed the amount excludable from gross income under subsection (a) and the excess is otherwise allowed as a deduction under such chapter 1. ‘‘(e) STATUTE OF LIMITATIONS.—If refund or credit of any overpayment of tax resulting from the application of this section is prevented at any time on or before April 15, 1979, by the operation of any law or rule of law (including res judicata), refund or credit of such over- payment (to the extent attributable to the application of this section) may, nevertheless, be made or allowed if claim therefor is filed on or before April 15, 1979.’’ [§ 120. Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(19)(A), Dec. 19, 2014, 128 Stat. 4039] Section, added Pub. L. 94–455, title XXI, § 2134(a), Oct. 4, 1976, 90 Stat. 1926; amended Pub. L. 97–34, title VIII, § 802(a), Aug. 13, 1981, 95 Stat. 349; Pub. L. 97–448, title I, § 108(a), Jan. 12, 1983, 96 Stat. 2391; Pub. L. 98–612, § 1(a), (b)(3)(A), Oct. 31, 1984, 98 Stat. 3180, 3181; Pub. L. 99–514, title XI, §§ 1114(b)(3), 1151(c)(3), (g)(1), 1162(b), Oct. 22, 1986, 100 Stat. 2450, 2503, 2506, 2510; Pub. L. 100–647, title I, § 1011B(a)(31)(B), title IV, § 4002(a), (b)(1), Nov. 10, 1988, 102 Stat. 3488, 3643; Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title VII, § 7102(a)(1), Dec. 19, 1989, 103 Stat. 2305; Pub. L. 101–508, title XI, § 11404(a), Nov. 5, 1990, 104 Stat. 1388–473; Pub. L. 102–227, title I, § 104(a)(1), Dec. 11, 1991, 105 Stat. 1687; Pub. L. 108–311, title II, § 207(10), Oct. 4, 2004, 118 Stat. 1177, related to amounts received under qualified group legal services plans. A prior section 120, act Aug. 16, 1954, ch. 736, 68A Stat. 39, related to statutory subsistence allowance received by police, prior to repeal by Pub. L. 85–866, title I, § 3(a), (c), Sept. 2, 1958, 72 Stat. 1607, effective with respect to taxable years ending after Sept. 30, 1958, but only with respect to amounts received as a statutory subsistence allowance for any day after Sept. 30, 1958. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as an Effective Date of 2014 Amendment note under sec- tion 1 of this title. § 121. Exclusion of gain from sale of principal residence (a) Exclusion Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or ex- change, such property has been owned and used by the taxpayer as the taxpayer’s principal resi- dence for periods aggregating 2 years or more. (b) Limitations (1) In general The amount of gain excluded from gross in- come under subsection (a) with respect to any sale or exchange shall not exceed $250,000. (2) Special rules for joint returns In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property— (A) $500,000 Limitation for certain joint re- turns Paragraph (1) shall be applied by sub- stituting ‘‘$500,000’’ for ‘‘$250,000’’ if— (i) either spouse meets the ownership re- quirements of subsection (a) with respect to such property; (ii) both spouses meet the use require- ments of subsection (a) with respect to such property; and (iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3). (B) Other joint returns If such spouses do not meet the require- ments of subparagraph (A), the limitation under paragraph (1) shall be the sum of the limitations under paragraph (1) to which each spouse would be entitled if such spouses had not been married. For purposes of the preceding sentence, each spouse shall be treated as owning the property during the