Expiring Gift Cards and Employee Gifts

[AuditorTurnedGood]

All,
I have a client that has in inventory a bunch of gift cards that will expire and become worthless on December 15th. The plan is to let them expire and then write off the value as spoilage at the end of the year. If they were distrubited to each employee instead, would there need to be payroll taxes paid on the amount of the card? They are $50 each, and each employee would get one. Thoughts? Thanks!

[Bees Knees]

Pub 15-B says:

You can exclude the value of a de minimis benefit you
provide to an employee from the employee’s wages. A de
minimis benefit is any property or service you provide to an
employee that has so little value (taking into account how
frequently you provide similar benefits to your employees)
that accounting for it would be unreasonable or administra-
tively impracticable. Cash and cash equivalent fringe ben-
efits (for example, use of gift card, charge card, or credit
card), no matter how little, are never excludable as a de
minimis benefit, except for occasional meal money or
transportation fare.

In general, cash is never a fringe benefit (except for specific uses mentioned). A gift card is the equivalent of cash. Therefore it must be added to wages on the W-2.

[taxea]

Expiring Gift Cards and Employee Gifts

Client can only write off the original cost of the cards and has probably already expensed them when he purchased them. My questions to client would be...when were they purchased? What was the total cost of the purchases? Has he already expensed this purchase? taxea