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Level 1

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

 
26 Replies
Level 7

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

A "gift" from an employer is not really considered a gift and the information below will provide some insight.  The ramifications on the tax return will be personal income tax and your share of social security and medicare tax.

  • It should be reported in TurboTax Premier using these steps:
    • Federal Taxes tab
    • Wages & Income
    • Scroll to Less Common Income
    • Show more > Select Miscellaneous Income at the bottom
    • Other income not already reported on a W2
    • Yes to Other Wages Received
    • Continue > Continue > Continue
    • Yes to Any Other Earned Income
    • Select Employee Compensation that was not on a W2
    • Enter the requested information
    • Reason Code is should have been reported on W2
This will record the additional share of your social security and medicare tax on page two of the 1040.

https://ttlc.intuit.com/replies/4818030

https://ttlc.intuit.com/replies/3481923

Level 8

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

The prior answer is wrong. Wrong, wrong, wrong, and incomplete. Businesses can give gifts to non-employees; they are limited as to how much of the gift's cost they can deduct. Whether a retirement gift is in the employer-employee context depends on the specific facts and circumstances. The traditional gold watch, for example, typically is not income if no future services will be rendered, the period of service is long enough, et cetera.

 

You should get professional advice on the car, preferably from someone who knows what they're talking about.

Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Level 8

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Neither link is relevant.

Highlighted
Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?


@helpfuluser wrote:

Neither link is relevant.


I presume you are a speed reader since you read the information at both links in less than two minutes since you posted after my post, including finding the correct information in the 95 pages at the second link.

Level 8

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Read them before--they're public and well-traveled. You're looking in the wrong spots, so you're pointing this person to the wrong information.

Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Length-of-Service Achievement Awards

 

An award made for length-of-service award may be excludable. However, it does not
qualify if either of the following applies:


The employee received the award during his or her first 5 years of
employment.

 

The employee received another length-of-service award (other than one of very
small value) during the same year or in any of the prior 4 years.


Awards other than for safety or for length-of-service are always nonqualified awards,
unless they are qualifying de minimis fringe benefits.

 

The maximum amount of excludable awards to a single employee during a calendar
year is limited to:
$400 for awards made under a nonqualified plan; or
$1600 in total for awards made under both qualified and nonqualified plans

Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Employee achievement award.

 

If you receive tangible personal property (other than cash, a gift certificate, or an equivalent item) as an award for length of service or safety achievement, you generally can exclude its value from your income. However, the amount you can exclude is limited to your employer's cost and can’t be more than $1,600 ($400 for awards that aren’t qualified plan awards) for all such awards you receive during the year. Your employer can tell you whether your award is a qualified plan award. Your employer must make the award as part of a meaningful presentation, under conditions and circumstances that don’t create a significant likelihood of it being disguised pay.

 

However, the exclusion doesn’t apply to the following awards.

  • A length-of-service award if you received it for less than 5 years of service or if you received another length-of-service award during the year or the previous 4 years.

  • A safety achievement award if you're a manager, administrator, clerical employee, or other professional employee or if more than 10% of eligible employees previously received safety achievement awards during the year.

See https://www.irs.gov/publications/p525#en_US_2018_publink1000229094

Level 17

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Here's the relevant statute:

https://www.law.cornell.edu/cfr/text/26/1.74-1

Level 8

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

The gift isn't an employee achievement award, though I appreciate the citation to actual law. I would look to 102(a), 102(c), 274(b), and the Duberstein case.

 

Again, the original poster should seek professional advice from someone who's thought carefully about these issues, and who can evaluate the specific facts and circumstances. The amount at stake is pretty large to give off-the-cuff advice.

Level 17

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

"I recently retired and was given a $32,000 vehicle as a gift from the company"  sure sounds like an employee achievement award to me.  I'm not sure how the taxpayer would convince an IRS auditor that it isn't.

Also, citing and quoting IRS references as done by @tagteam can hardly be considered "off the cuff" advice.

Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?


@TomD8 wrote:

"I recently retired and was given a $32,000 vehicle as a gift from the company"  sure sounds like an employee achievement award to me.  I'm not sure how the taxpayer would convince an IRS auditor that it isn't.


I absolutely concur. Considering the language in the IRS publication, I am virtually certain the argument that the non-taxable status of the length of service award (or whatever term one would choose) would be a loser.

 

Also, as @TomD8 sort of implied, isn't reporting the value of this "gift" (as other income or otherwise taxable) the safe and conservative route in this scenario? It seems to me that not reporting it would be ill-advised and sort of playing the audit lottery.

Level 8

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?

Look--only one exclusion need apply for the item to be excludable from income. The employee achievement award exclusion does not apply, and for good reason. That provision targets run-rate customary awards for current employees. The word "gift" in the post clearly implicates 102(a), which also uses the word "gift." If 102(a) applies, then the item is excluded. End of story.

 

The question is whether 102(a) applies. It may. It may not. But more facts are needed to reach an answer. If proper analysis is done, then this issue would be pretty easy to defend on audit. And, given the apparent lack of information reporting (which also supports gift treatment), it's unlikely to arise. (Though the poster should follow the law and not play the audit lottery.)

 

 

Level 20

I recently retired and was given a $32,000 vehicle as a gift from the company. They will not report it. Where/how should i include it for taxes?


@helpfuluser wrote:

....not play the audit lottery.)


Yes, except that is EXACTLY what you are suggesting in light of IRS publications (which represent, at the very least, their thinking on that matter).