Do I need to tax my "fun" stipend?

I hate to break it to you, but you have to tax your "fun" stipend. This is why no one invites me to parties. 

Let's get one thing straight: It's perfectly fine for your company to reimburse people for having a life. But if there's no business purpose or tax-preferred program for it (like an HRA, commuter benefit, or 401k), it has to be taxed as income. 

The logic trap is easy to fall into. Happy, healthy employees are more productive. Therefore, we pay for gym memberships and date nights. Since the company is paying, it's a business expense. 

That's not how the IRS sees it. 

If it doesn't directly help your core business, it's not a business expense. It's compensation. Even if there was a client or coworker around.

There may be plenty of valid reasons to reimburse someone for something that isn't a business expense. Including, sometimes, avoiding an awkward conversation with a quick "don't let it happen again." But unless you want to explain to the IRS why the business really benefitted from that night at the strip club, it's better to tax these personal stipends and "whoopsies."

Any time I'm presented with a new expense or stipend, I imagine making the case to an auditor. If I couldn't say it with a straight face, taxes come out.

📱Home internet and cell phone

Easy! We wanted people to be reachable and able to work anywhere. Not taxed.

🧘‍♂️ Yoga class

Unless you're a yoga studio, taxed.

💐 Flowers

Gesture from the team. Not taxed.

😬 Accidental Amazon purchase

Very cute shoes. Doesn't matter if they came in the same box as the laptop charger. Taxed. Don't let it happen again.

🧑🏻‍❤️‍💋‍🧑🏽 Date night

Doesn't matter how grumpy Wally was getting in meetings before he met someone. Taxed.

🎥 Adult film

Even if it showed up on the hotel bill for a work trip, taxed. Quietly, without making a big deal of it.

🤸💈 Strip club

...Taxed. And HR would like to have a quick chat.

What's the craziest thing you've ever seen on an expense report? Anonymized stories welcome in the comments.