This year Ed celebrated his 25^th year as an employee of Designer Jeans Company. In recognition of his long and loyal service, the company awarded Ed a gold watch worth $321 and a $2,180 cash bonus. What amount must Ed include in his gross income?

Question

Quizplus · Accepted Answer

The $2,180 cash bonus must be included in Ed's gross income as it is considered taxable income. The gold watch, however, can be excluded from Ed's gross income under the de minimis fringe benefit rule, which allows certain small, non-cash gifts to be excluded from an employee's gross income. In this case, the value of the watch ($321) falls under the de minimis threshold and can be excluded from Ed's gross income.

This Year Ed Celebrated His 25th Year as an Employee

This Year Ed Celebrated His 25^th Year as an Employee