During the current year, AC Corporation required a key employee, Taxpayer X, to transfer from AC's San Diego, California office to AC's Phoenix, Arizona office.AC agreed to pay the commission charged by the real estate agent on the sale of X's home in San Diego.Because the payment represents a "working condition fringe benefit," the amount of the real estate commission paid is not included in X's gross income for the current year.

Question

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The payment of the real estate commission by AC Corporation on behalf of Taxpayer X for the sale of X's home due to a job relocation does not qualify as a "working condition fringe benefit" under the IRS code. Instead, it is considered as income to the employee and should be included in X's gross income for the year. Working condition fringe benefits typically cover expenses that would be deductible by the employee as business expenses if they had paid them directly. However, costs associated with the sale of an employee's residence do not fall under this category.

During the Current Year, AC Corporation Required a Key Employee