Note: Nights on the Museum: Should Free Housing Provided to Museum Directors Also be Tax-Free

The Metropolitan Museum of Art is, arguably, one of the great cultural institutions of our time.  Visitors come from all over the world to indulge in its timeless collection spanning five thousand years of art and history.  It carries with its name not only the sound of resonating prestige, but also a mission to “stimulate appreciation for and advance knowledge of works of art that collectively represent the broadest spectrum of human achievement at the highest level of quality, all in the service of the public and in accordance with the highest professional standards.”[1]  To accomplish this mission, it requires that its director reside in a $4 million co-op, across the street from the museum, for free.[2]

Mr. Thomas Campbell, the newest director of the museum, is not the only curator receiving this generous fringe benefit.  This surprising advantage to the promotion of art and culture is also welcomed by the directors of other prestigious New York City museums,[3] including the president of the American Museum of Natural History, and director of the Museum of Modern Art.[4]  These three museums serve not only as homes to priceless works of art, but they also serve to provide their directors with about $15 million worth of “home.”[5]  A combined fair rental value of about $400,000 per year is provided free of charge, and free of tax, by the museums.[6]  This means that each director, in signing his or her employment agreement, accepts the luxurious housing, in addition to a handsome salary, as compensation.  Compensation, as most Americans know, is taxed.  However, for these museum directors, though their cash salary is included on their yearly income tax return, the value of the housing is not.  It apparently does not count as compensation.

In some situations this tax-free arrangement is not surprising.  It may be essential that an employee, such as a hospital worker, be available for twenty-four hour emergency calls.[7]  Parks may also provide housing for their rangers if they are required to be around at all hours of the day and night.[8]  Alternatively, certain jobs require individuals to move to isolated locations, such as a construction worker employed at a project at a remote job site,[9] or a military official called to relocate to a camp.[10]  Each of these situations seems fair, since if the employees were not provided with housing, it would be unlikely that they would be able to properly perform their work.  Does this call for necessity resonate in a museum director’s profession?  Of course, one important function of a museum director is to solicit and charm donors to contribute works of art to the museum.  However, does a museum director’s need for extravagant housing in a metropolitan area parallel a construction worker’s requirements for housing after he relocates to a secluded job site in Alaska?

Perhaps the answer to this question is buried deep within the purposes and policies of our tax code.  Though the government must collect revenues, maybe relief should be given to certain individuals to lighten their load.  This Note will argue that a museum director, or other executive of a cultural institution, does not qualify as one of these burdened taxpayers, and should not be able to exclude from his gross income the value of housing provided for him by his museum employer.  Part I will provide a history of Section 119, the provision of the Internal Revenue Code (the “Code”) that these directors look to for excluding the value of housing from gross income.  This part will include a brief discussion of Section 119’s legislative history and the reasons behind its enactment in 1954.  Next, Part II will illustrate the three “elements” of Section 119, which must all be satisfied to qualify for the exclusion.  This part will include several examples of how regulations, rulings, and judicial decisions have interpreted each element, and the standards that have been applied.  Part III applies these interpretations to a museum director’s treatment of housing, and argues that based on current case law, the value of housing should be included income.  Finally, Part IV concludes that though Section 119 is a necessary provision designed to alleviate the burden on those in unique professions, it does not serve the purposes of the Section to exclude the value of housing from a museum director’s income.

Jane Zhao: Syracuse University College of Law, J.D. 2012.


[1]. IRS Form 990, Schedule O for the Metropolitan Museum of Art for 2008,, (last visited Nov. 9, 2011).  “The Internal Revenue Service (IRS) Form 990 is titled “Return of Organization Exempt From Income Tax.”  Form 990 returns are required to be filed annually by most tax-exempt organizations, except for church and government-affiliated organizations.  Form 990 is “the primary tool for gathering information about tax-exempt organizations, for educating organizations about tax law requirements and ensuring their compliance.  Organizations use it to inform the public about their programs.”  Form 990 Resources and Tools,,,,id=214479,00.html (last visited Nov. 21, 2011).

[2]. Kevin Flynn & Stephanie Strom, Plum Benefit to Cultural Post: Tax-Free Housing, N.Y. Times, Aug. 9, 2010, at A1, available at

[3]. Though this Note will mainly focus on examples of New York City museums, it should be mentioned that museums throughout the nation are inconsistent in whether the housing provided to their director is tax-free.  For example, in 2008, the Art Institute of Chicago, recognized the value of housing provided to its director as gross income.  See IRS Form 990, Schedule J for the Art Institute of Chicago for 2008,, (last visited Nov. 9, 2011).  The Smithsonian, in Washington, D.C., did not provide housing to any employees.  See IRS Form 990, Schedule J for the Smithsonian Institution for 2008,, (last visited Nov. 9, 2011).  The Museum of Fine Arts in Boston and the San Francisco Museum of Modern Art did provide housing to their directors but did not disclose whether such housing was treated as gross income on the directors’ tax returns.  See IRS Form 990, Schedule J for the Museum of Fine Arts for 2008,, (last visited Nov. 9, 2011); IRS Form 990, Schedule J for the San Francisco Museum of Modern Art for 2008,, (last visited Nov. 9, 2011).

[4]. Flynn, supra note 2.

[5]. Id.

[6]. Id.

[7]. See 4 C.B. 85, 1921 WL 50340 (1921).

[8]. See Coyner v. Bingler, 344 F.2d 736 (3d Cir. 1965).

[9]. See Treas. Reg. § 1.119-1(f), Example (7) (2010).

[10]. See infra note 28.

Leave a Reply