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Hypo: Employer gives all employees except her son, a case of wine worth 200. She gives her son, also an employee, a case of wine worth 700. Does the son have gross income? Do the employees have gross income?

- would the son have to report the differnece between employee's gift and son's gift?
- what difference would it make if the company was giving the gift versus the boss personally?

If anyone could help me, that would be awesome! Exam in a day!

Issue looks to whether the wine is actually a gift or not to all employees. I'm rusty on perqs, but I think all the employees will have $200 of income. Son will have $200 of income. $500 above and beyond would be a gift, from mom to son. No tax on gift. If the company gave the wine, probably not a gift then, because why would a company have that type of relationship with employee. Ordinary income for everything then.

I can't answer off the top of my head, but 1.102-1(f)(2) should help.