The tax treatment of S corporation shareholders with respect to fringe benefits is not the same as the tax treatment for C corporation shareholders.

Question

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For certain fringe benefits,the recipient must be an "employee." For this purpose,partners are not treated as employees,whereas shareholders of a C corporation who are employed by the corporation are treated as employees.For these fringe benefit purposes,an S corporation is treated as a partnership and a greater than 2% shareholder is treated as a partner.

The Tax Treatment of S Corporation Shareholders with Respect to Fringe