Interpreting the tax code related to incentive travel can be daunting. Here are some simple and straightforward guidelines:
The recipient of a pure incentive trip — one where the trip is being taken primarily for pleasure — is responsible for paying taxes on the fair market value of that trip (the cost of airfare, hotel, ground transportation, etc.). Some companies award a cash bonus to help offset the taxes that will be owed by the recipient.
The company gets a dollar-by-doll