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 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. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  6. Taxes

    Switzerland's Declining Tax Haven Appeal

    Switzerland's tax haven allure is being threatened by efforts by the US and other governments to make Swiss banks give up their much-vaunted secrecy.
  7. Taxes

    Are You Missing Out On These Tax Exemptions?

    To lower your tax bill, make sure that you're taking all the exemptions that apply to you.
  8. Taxes

    The Fundamentals of Draghinomics

    European Central Bank President Mario Draghi has introduced a set of reforms aimed at reviving the eurozone economy.
  9. Taxes

    The Fundamentals Of Abenomics

    Abenomics is Japanese Prime Minister Shinzo Abe's aggressive, three-pillared economic policy.
  10. Taxes

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center