Line Of Business Limitations


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.

BREAKING DOWN '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.

  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. Section 1231 Property

    A tax term relating to depreciable business property that has ...
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