This depends on whether or not the employee as a shipper is involved in the hotel business. For example if the Employee ships to the hotel, then this discount can be excluded from gross income. If the employee’s shipping is too remote from the hotel then he/she is ineligible form excluding the discount from his/her gross income. Line of business problem. The hotel is not a ship…Our employee does not work in that line of business. Employee does have gross income . (h) Same as (g), above, except that Employee is comptroller of the conglomerate. See Reg. §1.132-4(a)(1)(iv). The Employee may exclude the value of the hotel room since he performs services that directly benefit more than one line of business. If one employee works in several types of businesses, that employee can get a benefit in any of those lines of business since the work touches both lines of business. This seems to be a special benefit to those who control the business, at odds with the non discriminatory clause supra . But it isn’t per prof. It is because of the nature of his work. (i) Employee sells insurance and employer Insurance Company allows Employee 20% off the $1,000 cost of the policy. We can answer this given the facts of this problem. This must be a service, otherwise we couldn’t answer it without a gross profit percentage. P. 94 says it is a service. Congress says that insurance products are services and they are allowed a 20% discount, period. The allowable discount is 20%, this is a 20% discount, so it qualifies. (j) Employee is a salesman in a home electronics appliance store. The prior year the store had $1,000,000 in sales and a $600,000 cost of goods sold. Employee buys a $2,000 video cassette recorder from Employer for $1,000. 1000-600/1000 = .40 excludable. 1 of income, .40 of 2 is excludable. $200 GI What is the concept for not awarding money over 40% Any money over 40% looks like a substantial cost. What congress is allowing the business to give
away is the profit. If the employer gives more, the employer is incurring a substantial additional cost, and Congress will not allow employee to acquire this tax free. Employer can give away as much as the profit and the employee will not have any tax. PROFESSOR STOPPED CLASS HERE 9/2/16 (k) Employee attends a business convention in another town. Employer picks up Employee’s costs. working condition fringe. Amount provided by the employer to permit the employee to do the employees job. Doesn’t matter if every employee gets this benefit. Consider it a business trip. Employer pays your airfare and hotel and gives 125 per diem to spend on other necessary elements. Might not even be a benefit. (l) Employer has a bar and provides the Employees with happy hour cocktails at the end of each week’s work. De minimis –Not discriminatory because it is given to all employees Not needed for employees to do job Too small in value for Congress to bother keeping track of. What is De minimis? Must go to regs. Something so small as to make it unreasonable to account. Is weekly sufficient to qualify as occasional? Exclusion as de minimis is occasional cocktail parties.
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- Fall '15
- Revenue, Taxation in the United States