Page 365 - Small Business IRS Training Guides
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New Tax Provision
TCJA section 13310 rearranged and expanded IRC 274(j)(3)(A) by adding new subsection (ii) to restrict the definition of
“tangible personal property” that may be considered a deductible employee achievement award.
The code section now provides that tangible personal property shall not include:
• Cash, cash equivalents, gift cards, gift coupons or gift certificates (other than arrangements conferring only
the right to select and receive tangible personal property from a limited array of such items pre-selected or
pre-approved by the employer), or
• Vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, other securities, and other
similar items.
The change applies to amounts paid or incurred after December 31, 2017.
Audit Considerations
The following information can be used to identify whether the taxpayer provides unallowable tangible personal property as
employee achievement awards:
• Employer and employee interviews: Discussions with the employer and the employees may give indications of
whether employee achievement awards include unallowable items.
• Employee Handbooks: Many taxpayers maintain a written employee handbook outlining the benefits available to
their employees. Fringe benefits such as awards are often described in these handbooks.
73233-102 13310-4 Tax Cuts and Jobs Act
