Thank you for the response!
After reviewing everything I can get my hands on, I am still falling on the other side of this question - believing that the room and board benefit is NOT taxable because of the qualifications met under IRS Pub 525.
I understand the point you are making between the two sets of rules; but it seems the only distinction in your analysis is who the employer is. In other words, if my son was still a student, but he was an employee of a non-university business, and received room and board benefits, and he met all the conditions in IRS Pub 525, the benefit would not be taxable. The only difference between the two circumstances is that the University is the employer in one example and a non-university entity is the employer in the other.
Whether the employer is the University or someone else does not appear to be a test for whether the benefit is taxable. Nor does there appear to be a "more" student vs. "more" employee test. He is employed as an RA and he meets the qualifications under IRS Pub 525 - which explain how room and board are taxable as an employment benefit. Under this circumstance, it appears that it should not be taxable.
I do agree that if the room and board benefits were NOT a condition of employment or if they did not meet the IRS Pub 525 requirements, it would be taxable.
Of course, I could be completely wrong about this and will have to talk to the IRS about it. 🙂
Regardless, thank you again for the response.
