During the year, John's employer provides him with several gifts: (1) Best buy gift certificate for...

During the year, John's employer provides him with several gifts: (1) Best buy gift certificate for $750, (2) Wedding gift (gold watch) worth $900, and (3) Weight loss award (art painting) worth $750. What is the total amount of taxable benefit that will be included in John's income as a result of these gifts?

Round to the nearest dollar. Do NOT write commas, dollar signs, or decimals in your response.

Mr. Mark Farther is provided with a car that is leased by his employer. The monthly lease payments for 2019 are $430, including sales tax. During 2019, he drives the automobile a total of 24500 kilometers, of which 9000 are employment related. The automobile is available to him throughout the year. His employer paid a total of $5500 in operating costs. When he is not using the automobile, company policy requires that it be returned to their premises. Calculate Mr. Farther's 2019 standby charge for the use of this automobile.

Round to the nearest dollar. Do NOT write commas, dollar signs, or decimals in your response.

Solutions

Expert Solution

Answer-1-

Assumption: Employer and employee are covered under Fereral US Law.

All cash or gift cards redeemable for cash are taxable to the employee, even when given as a holiday gift further all Monetary prises, including achievement awards, as well as non-monetary bonuses will also be treated as taxable benefit.

Almost all the gifts given by employer to employees are taxable in the hands of employees provided it is de minimis.

Now which gifts are treated as de minimis, - it’s too trivial or minor to merit consideration benefits. It allow an employer to give “traditional birthday and holiday gifts of property (not cash) with a low fair market value normally upto $75.

Further if gifts are awarded for length of service or safety achievement are not taxable.

In the given case John has received best buy gift for $750 , wedding gift for $ 900 and weight loss award for $ 750.

All gifts can not be treated as de minimis and are taxable gifts.

Hence total taxable benefit included in John's Income = 2400.

Answer = 2400

Note: If it is canadian law then gifts upto $ 500 annually is not taxable above it is taxable then taxable benefit = $1900.

ekkarill92 answered 1 year ago

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