I was a majority owner of a software publishing business in the 80's. After we started making money, I decided to have the company buy health insurance for all the employees including myself. Treated the health insurance as an expense just like every other corporation did.
The difference was I was a majority owner of a privately held corporation. In 1989, the IRS decided that people in that situation should pay income tax on the health benefit. My employees weren't taxed, just the three officers/owners of the company were taxed.
Since we were the owners of the business, we decided to make ourselves whole by granting ourselves a raise equivalent to the tax burden. At the time, the federal tax rate was 36%, State taxes were 9% and social security and payroll added another few percent so we were paying close to 50% income tax. That meant for every $100 in additional tax we had to pay, we had to pay ourselves an additional $200 to cover the new tax. The reason was that when we gave ourselves a $100 raise to cover a $100 in taxes, we now had $100 additional income we had to pay 50% income tax on. Give ourselves another $50 raise and we have to pay $25 tax on that and so on.
There's an aphorism in conservative circles that governments tax activities they don't like and subsidize activities they do like. The IRS is saying they don't like Google employees getting their meals paid for even though Google can make an excellent argument for doing so. Doesn't matter.
The IRS has become so onerous in its demands on small businesses that I eventually threw in the towel even though the business was profitable most of the time. I didn't go into business to work for the government but that's basically what ended up happening.