The gym has to be owned by the employer, operated by the employer, and the employees have to be the one's who substantially use the gym. If these criteria are not met, the gym membership is taxable income to the employees as a fringe benefit under Code Section 132(j)(4).
answered 01 Dec '10, 20:16
If you are asking as an S-corporation owner paying for the employees, "yes" you can deduct the cost of a gym membership. However, if it is not structured properly, it would be taxable to the employees as W-2 compensation. You would need to make a decision on whether you would gross them up or make them whole on the tax.
answered 10 Jun '11, 16:59