Why SimCity "Arcologies" would make an amazing tax shelter...

In the SimCity games there was this thing called an "arcology", which was basically a giant self-contained city inside of a building.  They are fictional (although a lot of the new developments here in NYC aren't far off), but big companies could actually save a lot in taxes if they invested in one of these - because of something called a "qualified fringe benefit."

Employers can provide housing to their employees as a tax-free benefit if the housing is (A) for the convenience of the employer, (B) on the employer's premises, and (C) required as a condition of employment.  Thus, if Google built a Forest Arco here in New York City where its employees lived and worked, the value of this residence would be both deductible to Google and, at the same time, tax-free to its employees.  This can be contrasted with Google paying its employees a salary for them to find housing on their own.  The rule applies to New York City and state taxes as well.  (these generally follow the federal numbers as a starting point)

The difference is not trivial - when Google pays an employee a salary, a significant chunk of it goes toward taxes.  Depending on the total salary amount, only about two thirds of the $50,000 or so they would be paying to the employee which the employee would then use to rent a Manhattan apartment would actually make it to the employee.  Thus, depending on the number of employees and their standard of living, the company could potentially save millions by building a live-work arcology.

Of course, the whole "required to live there" thing might be a drawback.  But given the cost savings I feel they could make the arco pretty nice?   I hear they are tearing down papaya king here on the Upper East Side...maybe they could put a launch arco where it used to be.

Hire me as your in-house tax attorney, Google - I'll set this up for you.

(but the tax attorney is getting the penthouse as part of the deal...)

Nate Strand, Tax Attorney  | Upper East Side, NYC 

399 East 78th Street, Apt 1D, New York, NY 10075

(646) 737-4639   nate.strand@icloud.com