Line Of Business Limitations

AAA

DEFINITION of 'Line Of Business Limitations'

A federal income tax rule applied to fringe benefits that employers provide their employees. It states that if a company is engaged in multiple lines of business and an employee receives a fringe benefit from a line of the company's business that she does not work in, she must pay taxes on that benefit.

INVESTOPEDIA EXPLAINS 'Line Of Business Limitations'

For example, if an individual works for a movie theater and her company also owns an amusement park, if she received free or discounted admission to the amusement park, she would be required to pay taxes on the value of the free ticket or the discount because the IRS would consider this benefit to be income. However, if she saw a movie for free at the theater where she worked, she would generally not have to pay tax on the amount of the free movie ticket because it would not be subject to line of business limitations.

RELATED TERMS
  1. Cash Wages

    Cash wages include any kind of compensation that comes in the ...
  2. Fringe Benefits

    A collection of various benefits provided by an employer, which ...
  3. Unearned Income

    Any income that comes from investments and other sources unrelated ...
  4. Earned Income

    Income derived from active participation in a trade or business, ...
  5. Taxable Income

    The amount of income that is used to calculate an individual's ...
  6. Guideline Premium And Corridor ...

    A test used to determine whether an insurance product can be ...
RELATED FAQS
  1. How is a corporate bond taxed?

    A corporate bond is taxed through the interest earned on the bond, through capital gains or losses earned in the early sale ... Read Full Answer >>
  2. What are some of the advantages and disadvantages of absorption costing?

    Companies must choose between using absorption costing or variable costing in their accounting systems. There are advantages ... Read Full Answer >>
  3. What taxes will I pay if I win a lot of money while gambling in Las Vegas?

    Every year, thousands of people travel to gambling hot spots, such as the Nevada cities of Las Vegas and Reno, with the hope ... Read Full Answer >>
  4. How can I lower my effective tax rate without lowering my income?

    There are lots of ways to lower your effective tax rate, although your individual circumstances determine whether you can ... Read Full Answer >>
  5. What is the justification for allowing deferred tax liabilities?

    A deferred tax liability tracks the temporary difference that arises between a company's income taxes that will be due in ... Read Full Answer >>
  6. Do I need to file an income tax return every year?

    Contrary to popular belief, there are indeed situations where a person does not need to file a tax return every year. For ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Benefit Issues When Your Employer Goes Bankrupt

    There are some safeguards in place to ensure that health benefits don't just disappear when a plan is canceled.
  2. Budgeting

    The Demise Of The Defined-Benefit Plan

    Experts are making bleak predictions for your post-work years. Be prepared and plan for your future.
  3. Options & Futures

    Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.
  4. Retirement

    Benefits for Members of the Armed Forces

    If your plans have been affected by your time in the combat zone, fear not!
  5. Taxes

    What's an Audit?

    An audit is an objective examination of accounting records that makes sure the records are a fair and accurate representation of the transactions they claim to represent.
  6. Taxes

    What is Adjusted Gross Income?

    Adjusted gross income (AGI) is a term from the Internal Revenue Code. AGI is used to determine a person’s income taxes due.
  7. Bonds & Fixed Income

    Abenomics Vs. Quantitative Easing: Which Works Best?

    Abenomics and QE are versions of extraordinary stimulus measures initiated by the Japanese government and the U.S government, respectively.
  8. Taxes

    Explaining Progressive Tax

    A progressive tax is a levy in a tax system where the tax rate increases as the taxable base increases.
  9. Economics

    Why Working Doesn't Add Up For Many Women

    A type of tax deduction for Japanese stay-at-home wives puts a barrier on women working full time in the country.
  10. Taxes

    Tea Party Vs. Republican Party: Who Will Win In 2016?

    What agendas define the rift between the Tea Party and the Republican establishment, and which side will win the presidential nomination in 2016?

You May Also Like

Hot Definitions
  1. Fracking

    A slang term for hydraulic fracturing. Fracking refers to the procedure of creating fractures in rocks and rock formations ...
  2. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  3. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  4. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  5. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  6. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
Trading Center