If your company pays for a fringe benefit for you, e.g. for plane tickets to fly to various conventions/events and your friends and family members can tag along with you, have you or your family members realized any taxable income?
Generally we would start our analysis of this problem by looking at section 61 of the Internal Revenue Code. Section 61 defines what Gross Income is.
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived...
Generally payments from an employer to an employee are taxable as compensation. It is true that an employee saves money he would have otherwise spent on this travel but perhaps he would not have chosen to travel. So it would be unfair to require him to pay income on something he might not have purchased of his own free will had it not been for the employer. Therefore an employee is generally taxed if the benefit he received was necessary for the performance of his duties. For instance, if he was required to travel by his employer, his tickets would be exempt from taxation.
What about his family and friends that came with him? If their presence was necessary for the performance of his duties, then their tickets would not be taxable. If they came for pleasure, their tickets would be taxed.
Obviously I am not going in-depth in my analysis.
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I am a law student, not a lawyer. This website is composed as a personal study aid for myself as I study law, it does not contain legal advice and I am not your lawyer. Please seek legal advice from a lawyer, not a blog.
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