Services the employer may provide the employee at no additional cost to the employer. Generally, the benefit is the ability toairliner). Such amounts are excludible from the recipient's gross income.Damages received or paid by the taxpayer can be classified as compensatory damages or as punitive damages. Punitive dnegligence or the intentional infliction of harm. Such damages are includible in gross income. § 104.Discounts offered employees on merchandise or services that the employer ordinarily sells or provides to customers. The dcase of property, the discount cannot exceed the employer's gross profit (the sales price cannot be less than the employer'spercent of the normal sales price. § 132.Indebtedness that was incurred or assumed by the taxpayer in connection with real property used in a trade or business ancorporation. For qualified real property business indebtedness, the taxpayer may elect to exclude some or all of the incomethe election is made, the basis of the property must be reduced by the amount excluded. The amount excluded cannot be gdebt over the fair market value (net of any other debt outstanding on the property) of the property securing the debt. § 108(cTransportation benefits provided by the employer to the employee. Such benefits include (1) transportation in a commuter hof employment, (2) a transit pass, and (3) qualified parking. Qualified transportation fringes are excludible from the employenot exceed $255 per month in 2016 and category (3) does not exceed $255 per month in 2016. These amounts are indexedA program that allows college tuition to be prepaid for a beneficiary. When amounts in the plan are used, nothing is includededucation expenses. § 529.Scholarships are generally excluded from the gross income of the recipient unless the payments are a disguised form of corestrictions on the exclusion. The recipient must be a degree candidate. The excluded amount is limited to amounts used focourses of instruction. Amounts received for room and board are not eligible for the exclusion. § 117.A provision that limits the recognition of income from the recovery of an expense or a loss properly deducted in a prior tax yAssume that last year Gary had medical expenses of $4,000 and adjusted gross income of $30,000. Because of the AGI lim[$4,000 ? (10% × $30,000)]. If this year Gary is reimbursed in full by his insurance company for the $4,000 of expenses, thereimbursement to $1,000 (the amount previously deducted with a tax saving).A type of fringe benefit received by the employee that is excludible from the employee's gross income. It consists of propertwhich the employee could take a tax deduction if the employee had paid for them. § 132.
Accounting methodCDeductionsCCCHobby lossesCReasonablenessCStartup expendituresVacation homesDeductions for adjusted gross incomeDeductions from adjusted gross incomeInvestigation expenses Ordinary and necessaryRelated-party transactions