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Taxable Gifts and Awards

  • Posted
  • Dec 08, 2016
What's New

Taxable Gifts and Awards

  • Employers cannot give gifts to employees.  IRC 102 (c) (1) (“Subsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee.”)
  • Employer awards are generally taxable wages .  Gross income includes amounts received as prizes and awards with certain limited exceptions.  IRC 74  This includes cash and non cash gifts

Exception to general rule that awards are taxable

  • Be given for length of service or safety achievement.
  • Be tangible personal property, other than cash, gift certificates or equivalent items.
  • Be given under conditions and circumstances that do not create a significant likelihood of the payment of disguised compensation.
  • Be given as part of a meaningful presentation.
  • Be no more than the specified dollar limits ($1,600 or $400 if not a qualified plan award). IRC 274(j)(3)(A)
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