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Picnics, Flowers & Fruit: Enjoy These Tax-Free Benefits

08Aug2017

Picnics, Flowers & Fruit: Enjoy These Tax-Free Benefits

Job well done! Let’s have a picnic.

Tax regulations allow employees to receive certain tax-free de minimis fringe benefits. Examples of de minimis fringe benefits include occasional cocktail parties, group meals, or picnics for employees and their guests; birthday or holiday gifts of property (not cash) with a low fair market value; occasional theater or sporting event tickets; coffee, doughnuts, and soft drinks; and flowers, fruit, books, or similar property provided to employees under special circumstances (e.g., on account of illness, outstanding performance, or family crisis).

The cost of the de minimis benefit is deductible by the business and tax free to the employee. Since a small business owner may be both the owner and an employee, taking advantage of excludable fringe benefits allows the owner to receive a double benefit.

Two requirements must be met for the fringe benefit to qualify: (1) value and (2) frequency.

Value: A de minimus benefit must have so little value that accounting for it would be unreasonable or administratively impractical.

Frequency: A de minimus benefit will not qualify if given too frequently.

Luckily, these rules are the same regardless of what type of entity you own. You are also free to provide these benefits to any employee including highly compensated employees such as corporate directors, independent contractors, and partners in a partnership.

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  • 8 Aug, 2017
  • Karina Torres
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