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. Taxable Income

    The amount of income that is used to calculate an individual's ...
  3. Fringe Benefits

    A collection of various benefits provided by an employer, which ...
  4. Earned Income

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

    Any income that comes from investments and other sources unrelated ...
  6. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
Related Articles
  1. Benefit Issues When Your Employer Goes ...
    Options & Futures

    Benefit Issues When Your Employer Goes ...

  2. Personal Pensions: Repackaging The Annuity
    Options & Futures

    Personal Pensions: Repackaging The Annuity

  3. Benefits for Members of the Armed Forces
    Retirement

    Benefits for Members of the Armed Forces

  4. The Demise Of The Defined-Benefit Plan ...
    Budgeting

    The Demise Of The Defined-Benefit Plan ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center