Special rules
(1) Exclusions under subsection (a)(1) and (2) apply to highly compensated employees only if no discrimination
(1)Exclusions under subsection (a)(1) and (2) apply to highly compensated employees only if no discrimination#
Paragraphs (1) and (2) of subsection (a) shall apply with respect to any fringe benefit described therein provided with respect to any highly compensated employee only if such fringe benefit is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees.
(2)Special rule for leased sections of department stores#
(A) In general For purposes of paragraph (2) of subsection (a), in the case of a leased section of a department store— (i) such section shall be treated as part of the line of business of the person operating the department store, and (ii) employees in the leased section shall be treated as employees of the person operating the department store.
(B) Leased section of department store For purposes of subparagraph (A), a leased section of a department store is any part of a department store where over-the-counter sales of property are made under a lease or similar arrangement where it appears to the general public that individuals making such sales are employed by the person operating the department store.
(2)(A)In general#
For purposes of paragraph (2) of subsection (a), in the case of a leased section of a department store—
(i) such section shall be treated as part of the line of business of the person operating the department store, and
(ii) employees in the leased section shall be treated as employees of the person operating the department store.
(2)(A)(i)#
such section shall be treated as part of the line of business of the person operating the department store, and
(3)Auto salesmen#
(A) In general For purposes of subsection (a)(3), qualified automobile demonstration use shall be treated as a working condition fringe.
(B) Qualified automobile demonstration use For purposes of subparagraph (A), the term “qualified automobile demonstration use” means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located if— (i) such use is provided primarily to facilitate the salesman’s performance of services for the employer, and (ii) there are substantial restrictions on the personal use of such automobile by such salesman.
(3)(A)In general#
For purposes of subsection (a)(3), qualified automobile demonstration use shall be treated as a working condition fringe.
(3)(B)Qualified automobile demonstration use#
For purposes of subparagraph (A), the term “qualified automobile demonstration use” means any use of an automobile by a full-time automobile salesman in the sales area in which the automobile dealer’s sales office is located if—
(i) such use is provided primarily to facilitate the salesman’s performance of services for the employer, and
(ii) there are substantial restrictions on the personal use of such automobile by such salesman.
(4)On-premises gyms and other athletic facilities#
(A) In general Gross income shall not include the value of any on-premises athletic facility provided by an employer to his employees.
(B) On-premises athletic facility For purposes of this paragraph, the term “on-premises athletic facility” means any gym or other athletic facility— (i) which is located on the premises of the employer, (ii) which is operated by the employer, and (iii) substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).
(4)(A)In general#
Gross income shall not include the value of any on-premises athletic facility provided by an employer to his employees.
(4)(B)On-premises athletic facility#
For purposes of this paragraph, the term “on-premises athletic facility” means any gym or other athletic facility—
(i) which is located on the premises of the employer,
(ii) which is operated by the employer, and
(iii) substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).
(4)(B)(i)
(5)Special rule for affiliates of airlines#
(A) In general If— (i) a qualified affiliate is a member of an affiliated group another member of which operates an airline, and (ii) employees of the qualified affiliate who are directly engaged in providing airline-related services are entitled to no-additional-cost service with respect to air transportation provided by such other member, then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.
(B) Qualified affiliate For purposes of this paragraph, the term “qualified affiliate” means any corporation which is predominantly engaged in airline-related services.
(C) Airline-related services For purposes of this paragraph, the term “airline-related services” means any of the following services provided in connection with air transportation: (i) Catering. (ii) Baggage handling. (iii) Ticketing and reservations. (iv) Flight planning and weather analysis. (v) Restaurants and gift shops located at an airport. (vi) Such other similar services provided to the airline as the Secretary may prescribe.
(D) Affiliated group For purposes of this paragraph, the term “affiliated group” has the meaning given such term by section 1504(a).
(5)(A)In general#
If—
(i) a qualified affiliate is a member of an affiliated group another member of which operates an airline, and
(ii) employees of the qualified affiliate who are directly engaged in providing airline-related services are entitled to no-additional-cost service with respect to air transportation provided by such other member,
then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.
(6)Highly compensated employee#
For purposes of this section, the term “highly compensated employee” has the meaning given such term by section 414(q).
(7)Air cargo#
For purposes of subsection (b), the transportation of cargo by air and the transportation of passengers by air shall be treated as the same service.
(8)Application of section to otherwise taxable educational or training benefits#
Amounts paid or expenses incurred by the employer for education or training provided to the employee which are not excludable from gross income under section 127 shall be excluded from gross income under this section if (and only if) such amounts or expenses are a working condition fringe.