Class 5, Employment Related Exclusions Flashcards
Fringe benefits
IRC §132(а)
If a taxpayer receives fringe benefits (no -additional cost service) from employer, then excluded from gross income
No-additional cost service requirements
IRC § 132 (b )
Service provided by employer to employee for use by employee IF
① offered for sale to customers in the ordinary course of the employer’s business in which the employee is performing services, AND
② employer does not incur a substantial additional cost in providing the service to an employee
Definition of employee for purposes of no-additional cost services
IRC §132(h)
① retired and disabled former employees and surviving spouse of employee are treated as employee:
A) any individual formerly employed by employer in such line of business and who separated from service w/ such employer in such line of business by reason of retirement or disability
b) any widow a widower of any individual who dies while employed by such employer in such line of business or while an employee
② spouse and dependent children:
- dependent child = dependent of the employee OR both of whose parents are deceased and who has not attained the age of 25
Reciprocal agreements
IRC §132 (i)
Any service provided by an employer to an employee of another employer shall be treated as provided by the employer if:
① such service is provided under a written agreement between such employers; and
② neither employer incur any substantial additional costs (including foregone revenue) in providing such services or under the agreement.
Non-discrimination limitation
IRC §132(j)
IF an employer offers the no-additional cost services on terms that discriminate in favor of “highly compensated employees”, THEN the exclusion will not apply to any highly compensated employee who receives the benefit.
- exclusion still applies to non-highly compensated employees who receive benefit
NOTE: No partial exclusions for highly compensated employees; FMV included if exclusion does not apply
