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. Economics

    EU Probes Tax Laws To Catch Corporate Cheaters

    Recently, the EU has launched an investigation into tax deals between Amazon and the country of Luxembourg.
  6. Professionals

    How are an employee's fringe benefits taxed?

    Discover how receiving fringe benefits can increase total compensation for employees and how it is important to understand how these benefits are taxed.
  7. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  8. Taxes

    If I reinvest my dividends, are they still taxable?

    Take a brief look at how the Internal Revenue Service taxes different kinds of dividends, including taxation on dividends that are reinvested.
  9. Taxes

    What types of revenue are taxable?

    Learn about all the various types of taxable corporate revenue and how different revenues are designated and differentiated from one another.
  10. Taxes

    How are trust fund earnings taxed?

    Trust fund earnings that are distributed are paid by the beneficiary. The trust pays taxes on retained earnings and principal increases.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center