Question

Calculator 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 nonemployee charge was $20 per round. OA. Tom must include $800 in gross income. Ob. Tom is not required to include anything in gross income because this is a no-additional-cost service fringe benefit Ot Tom is not required to include the $800 in gross income because the use of the course was a gift. Od. Tom is not required to indude anything in gross income because it is a de minimis fringe benefit Os. None of these choices are correct

Answer 1

The correct answer for the question is Option B - Tom is not required to include anything in gross income because this is a no-additional-cost service fringe benefit. This facility provided by Valley Country Club to its employees does not involve deviation from the employer's original line of business . Additionally, since the facility is provided to its employees when the number of players at the course is at its lowest does not involve any loss of existing capacity to provide the service to its employees. Further , the employer does not incur any loss of revenue as a result of offering the Golf club to its employees. As such, this is the correct answer.

Option A is incorrect. Tom is not required to include $800 in gross income because this qualifies for a No-additional cost service fringe benefit.

Option C is incorrect because the use of course was not a gift. The use of the Golf course was merely provided as a no additional cost service benefit.

Option D is incorrect. This transaction does not qualify for a De minimis fringe benefit because these are generally no-additional cost services that are provided by employers to employees.

Option E is incorrect as we have the answer at Option B.

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