Tuesday, November 13, 2012

Taxing Non-Cash Benefits and Items

Section 61 requires an OBJECTIVE measure of fair market value. Purchasers may not adjust the retail prices of the goods and services received merely because they decide among themselves that such goods and services were overpriced. The fair market value of the goods and services received is the prices charged to retail customers.

Non-Cash economic benefits (other than imputed income and unrealized appreciation) are generally includable in gross income in the absence of an explicit exclusion provision.

Numerous exclusion provisions, most of these provisions require both a specified type of non-cash benefit and a specified source of the benefit. In the case of many of the exclusions for employer-provided benefits, however, taxpayer purchases of the same items are either not deductible at all or are deductible subject to severe restrictions.

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