Employee Benefits. Al flies for AAA Airlines. AAA provides its employees with se

Question

Employee Benefits. Al flies for AAA Airlines. AAA provides its employees with several
fringe benefits. Al and his family are allowed to fly on a space-available basis on AAA
Airline. Tickets used by Al and his family during the year are worth $2,000. AAA paid for
a subscription to two magazines published for pilots. The subscriptions totaled $80. The
airline paid for Al’s meals and lodging while he was away from home overnight in connection
with his job. Such meals and lodging cost AAA $10,000. Although Al could not eat
while flying, he was allowed to drink coffee provided by the airline. The coffee was worth
about $50. AAA provided Al with free parking, which is valued at $100 per month. The
airline treated Al and his family to a one-week all-expenses-paid vacation at a resort near
his home. This benefit was awarded because of Al’s outstanding safety record. The value
of the vacation was $2,300. Which of these benefits are taxable to Al?

Explanation / Answer

the 2300 vacation is taxable. safety awards have to be less than 1600 for all awards given to that employee or 400 for nonqualified to be nontaxabe. the rest is nontaxable - no additional cost service (the space available flights), meals and lodging and subscriptions would be deductible if Al would not be reimbursed or paid himself, coffee is a de minimis fringe benefit, and $100 per month in employer provided parking is less than the amount that may be excludded for this.

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