What is meant by the fair market value of fringe benefits?

Author: Alice Gilman

Unless the Internal Revenue Code states otherwise, taxable fringe benefits are valued at their fair market value. The fair market value is the amount an individual would have to pay in an arms-length transaction with a disinterested third party to buy the same product or service. Sometimes, an objective measure of fair market value exists. For example, the fair market value of stock is the value that is quoted on an exchange.