Employer Paid Cosmetic Surgery: Tax Consequences to the Employer and Employee

Abstract

The tax treatment of cosmetic surgery to serve a business purpose has come under IRS scrutiny. This paper looks at an employer request of an employee to undergo breast augmentation for the benefit of the employer. Tax consequences to the employee and employer need to be considered. Though a situation like this would often lead to a taxable event to the employee, there are considerations in which cosmetic surgery could be a deductible event to the employer, and not taxable to the employee. As a result of a small change within the Tax Cuts and Jobs Act (TCJA), it appears that the tax benefits to the employee are significantly improved. All identifying information of the employer and employee have been altered for discussion within this paper.