Non Cash Compensation

[spanel]

Employee of a Farm get paid normal wage.. 50k
Employer gives Employee 10k worth of grain as compensation

Here's where it goes off the rails maybe...

Employer lets Employee store grain in bins until Employee is ready to sell (price goes up/down). Employee sells and sale price gets reflected on w2. Lets say sells for $15000.

Here is what the W2 looks like

65K Line 1
50k Line 3
50k Line 5


Should not Line 1 be FMV on the date earned, not the date sold (could be months later)
Should not line 3/5 match line 1

Thanks!!

Chris

[kathyc2]

From Pub 15

Wages not paid in money.



If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you’re said to pay them “in kind.” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Generally, the fair market value of such payments at the time they’re provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes.

However, noncash payments for household work, agricultural labor, and service not in the employer's trade or business are exempt from social security, Medicare, and FUTA taxes. Withhold income tax on these payments only if you and the employee agree to do so. Nonetheless, noncash payments for agricultural labor, such as commodity wages, are treated as cash payments subject to employment taxes if the substance of the transaction is a cash payment.

[Rapid Robert]

"Employer lets Employee store grain in bins until Employee is ready to sell"

That is more non-cash compensation that needs to be reported and taxed at FMV.

"Should not line 3/5 match line 1"

There are many situations where it does not.