Under what condition are employer-sponsored athletic facilities considered nontaxable fringe benefits?

• A. Facilities qualify as a de minimis fringe
• B. Employer incurs no substantial additional cost, except labor, to provide the facilities
• C. Facilities are on the employers' premises
• D. The employer requires substantiation of the amount, time, and business purpose of the facilities' use

Answer: (C)

The key idea is that employer-provided athletic facilities are nontaxable when they’re located on the employer’s premises. Being on-site makes the benefit a convenient workplace amenity rather than compensation, so its value can be excluded from the employee’s wages. If the facility weren’t on the employer’s premises, the benefit would generally be taxable unless it fits another fringe-category rule under separate criteria. Substantiation isn’t what determines the exclusion here—the critical factor is the on-site location.