Qualified Employee Discounts
A qualified employee discount is a discount offered by the employer to employees with respect to property or services for the personal use of the employee and his dependents.
This exclusion from income applies to a price reduction you give an employee on property or services you offer to customers in the ordinary course of the line of business in which the employee performs substantial services. However, it does not apply to discounts on real property or discounts on personal property of a kind commonly held for investment (such as stocks or bonds). For a qualified employee discount to be excludable from an employee's income, the discount must be a discount on services or property offered to customers in the ordinary course of the business in which the employee is engaged. The discount may not exceed 20% of the price at which the services are being offered to customers.If the discount is on property, it may not exceed the employer's gross profit percentage of the price at which the property is being offered to customers. In addition, qualified employee discounts may not be provided on real estate or investment property. Finally, as in the case of most benefits, the discount may not discriminate in favor of highly compensated employees.
For this exclusion, treat the following individuals as employees: