8913 / How did the 2017 tax reforms impact the treatment of employee achievement awards?

Generally, certain employee achievement awards granted by an employer to recognize the employee’s length of service or safety achievements are not taxable to the employee and are deductible by the employer. Under the 2017 tax reform legislation, certain awards are excluded from this treatment, including cash, cash equivalents, gift certificates, vacations, meals, lodging, tickets to sports or theater events, stocks, bonds, securities and other similar items.¹This essentially means that employee achievement awards must be received in the form of tangible personal property in order to receive favorable tax treatment. These provisions are effective for tax years beginning after December 31, 2017.

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1.IRC §§ 74, 274(j)(3).

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