This year Ed celebrated his 25th year as an employee of Designer Jeans Company. In recognition of his long and loyal service, the company awarded Ed a gold watch worth$250 and a $2,000 cash bonus. What amount must Ed include in his gross income?

Question

Quizplus · Accepted Answer

The $2,000 cash bonus is taxable and must be included in Ed's gross income. The gold watch, on the other hand, is considered a de minimis fringe benefit and is not included in gross income as long as its value is $100 or less. Since the value of the watch is $250, it cannot be excluded under the de minimis rule. Therefore, Ed must include the $2,000 in his gross income for the year.

This Year Ed Celebrated His 25th Year as an Employee