Which scenario should be reported as income for an employee?

The situation in which an employee receives a gift card on their birthday is considered taxable income. This is because gift cards are treated as cash equivalents by the IRS. When an employee receives a gift card, it represents a tangible benefit that is readily convertible to cash, and therefore, it is subject to income tax.

In contrast, a holiday food gift is typically considered a personal gift and is not taxable as income. Similarly, cab fare reimbursed for transportation to a meeting is often seen as a business expense reimbursement that is not taxable, provided that it meets certain conditions. A discount at a company cafeteria may also not be taxable under certain circumstances, especially if the discount is minimally valued and the cafeteria primarily serves employees.

Thus, the gift card stands out because it provides the employee with a financial advantage that could be used without restriction, thereby qualifying as income that must be reported.