Revenue – primary goal


Deductibility of gifts and employee awards



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Deductibility of gifts and employee awards – §274(b) – gifts excludible under §102 are only deductible by donor up to $25 per recipient per year.

  • “Gift-flavored compensation” governed by rules for employee achievement awards. Awards and prizes are included in recipient’s income. §74(a)

    • §74(c) and §274(j) – employee can exclude an employment achievement award while the employer gets a deduction.

      • Award must be for length of service or safety achievement. §274(j)(A)

      • If cost is fully deductible under §§162 and 274(j) then fair market value of the award (not cost) is excludible from income. §74(c)(1)

      • If part of cost is not deductible because it exceeds limitations in §274(j) ($400 or $1600) then employee must include part of the cost or the value that exceeds deduction.

    • Except for these sections, employment achievement awards are part of income under §61(a)(1). Leg history p. 107. – giving length of service or safety achievement awards might affect certain de minimis fringe benefits under §132(e) purportedly given for same reason.






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