Tax Benefits of an Employee Athletic Facility
Francis and Reeves Advisory
We help business owners create their legacies by minimizing tax burdens and maximizing bottom-line profits.
There are considerable advantages to creating an athletic facility for your employees for tax purposes.?
A gym, or athletic facility, can be tax deductible if the primary benefactors are your employees, more specifically, employees who are not officers, shareholders, or other owners who own a 10 percent or greater interest in the business or other highly compensated employees.
The law for the 10% ownership test treats employees as owning any interest owned by immediate family, ancestors, as well as lineal descendants.?
Highly compensated employees are employees who earn $150,000 or more in the preceding year.?
The athletic facility must benefit the employees more than the aforementioned owners and highly compensated groups. Think of this primary-benefit test as a 51-49 test, meaning the employees must use the facility on more days than these groups. If the facility passes the 51-49 test, the gym is tax-free to its users and deductible to the business as an employee recreational facility.?
If you would like to discuss the tax benefits of providing an athletic facility for your business or other tax-saving strategies, please call us on our direct line at (817)383-0927 or book a complimentary strategy session here.?
Sincerely,
The Francis and Reeves Advisory Team