that's taxable income that your employer should include on your w-2
Internal Revenue Code Section 102 covers the general rule that excludes property acquired “by gift, bequest, devise, or inheritance” from gross income. However, section (c)(1) of this law provides that employee gifts (including prizes and awards) – specifically “any amount transferred by or for an employer to, or for the benefit of, an employee” – may not be excluded from gross income.
So the general rule is that employee gifts and prizes are counted as income. However, as with most laws, there are exceptions.
“De minimis” fringe benefits are excluded from income. De minimis benefits are those that are “so small as to make accounting for [them] unreasonable or impractical.” For example, “occasional tickets for entertainment events; [certain] holiday gifts; flowers, fruit, books, etc., provided under special circumstances, etc.”
The IRS has ruled that items with a value exceeding $100 cannot be considered de minimis. Additionally, cash and cash equivalent gifts/prizes (such as gift certificates) cannot be considered de minimis or excluded from income because there is no difficulty in accounting for such prizes.
