Employees of the Valley Country Club are allowed to use the golf course without charge before and after working hours on Mondays, when the number of players on the course is at its lowest. Tom, an employee of the country club played 40 rounds of golf during the year at no charge when the non-employee charge was $20 per round.

A. Tom is not required to include anything in gross income because this is a "no-additional-cost service" fringe benefit.

B. Tom is not required to include the $800 in gross income because the use of the course was a gift.

C. Tom is not required to include anything in gross income because it is a de minimis fringe benefit.

D. Tom must include $800 in gross income.

E. None of these choices are correct.

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6 November, 16:08

Employees of the Valley Country Club are allowed to use the golf course without charge before and after working hours on Mondays, when the number of players on the course is at its lowest. Tom, an employee of the country club played 40 rounds of golf during the year at no charge when the non-employee charge was $20 per round.

A. Tom is not required to include anything in gross income because this is a "no-additional-cost service" fringe benefit.

B. Tom is not required to include the $800 in gross income because the use of the course was a gift.

C. Tom is not required to include anything in gross income because it is a de minimis fringe benefit.

D. Tom must include $800 in gross income.

E. None of these choices are correct.

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Answers (1)

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Mattie Gillespie · Answer 1

D: Tom must include $800 in gross income.

Explanation:

This is recommended because the financial statement will also report that the sum $800 was provided to the employee during the year as gift for the use on golf charges. Failure to do so will not promote full disclosure.