Question

26) A "No-additional-cost services" is?

A. Discount offered employees that's not more than 20% of the price for services offered to customers
B. 20% of the price for services offered to customers
C. A service or an item of such small value as to make accounting for the benefit unreasonable
D. A service the employee could deduct as a business expense if he or she had paid for it

Answer 1

No-additional-cost services refer to fringe benefits provided by employers to employees that do not incur significant extra costs for the employer, typically benefiting both parties.

Step-by-step explanation:

A "No-additional-cost services" refers to certain fringe benefits provided by an employer to an employee that are offered at no additional charge. These services are typically the same ones provided to customers in the ordinary course of the employer's line of business. The correct answer to the question is a benefit that is neither income to the employee nor a deductible business expense, but rather a non-taxable fringe benefit. Specifically, such services are offered to employees without the employer incurring any substantial additional cost, including foregone revenue, in providing them. This means, for example, that an airline employee may be able to fly for free on a stand-by basis on flights that have empty seats, which would be no additional cost services because the airline does not incur significant extra costs to provide this service.