When an executive flies on a private plane for business reasons, the company pays the bill and deducts the expense. However, if the flight is provided to the executive for personal reasons, the executives are required to pay income taxes on the amount the company paid for the flight, as the IRS considers travel as a form of compensation.
But if an outside security consultant says that the executives need a private jet for security reasons, the executive doesn't need to pay the tax.
According to Dealbook
, it's "a common corporate tax trick," that allows many virtually anonymous executives - Melvin J. Gordon of Tootsie Roll Industries, Terry Lundgren of Macy's, the heads of Cablevision, Time Warner, Kraft, Waste Management, and Home Depot
, for instance - to enjoy the kind of "security" that Apple didn't bother providing Steve Jobs.
Board members are also frequently rewarded with flights for "security" purposes.
By Business Insider