Question

LaMont works for a company in downtown Chicago. The firm encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $302 per month.

a. If LaMont receives one pass (worth $302) each month, how much of this benefit must he include in his gross income each year?

b. If the company provides each employee with $302 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?

Answer 1

a) Under S132(f)(5)(A), an employer may exclude transit passes as a qualified transportation fringe benefits. The amounts described in the Code are not indexed, but the IRS annually provides the indexed amounts in a Revenue Procedure. For 2017, the amount is $255 for qualified transportation fringe as described in Rev. Prpc. LaMont must include $564 per year into taxable income ($47 ($302 of benefits less $255exclusion) per month into income)

B) Under §132(f)(5)(C), an employer may exclude qualified parking as a qualified transportation fringe benefits. The amounts described in the Code are not indexed, but the IRS annually provides the indexed amounts in a Revenue Procedure. For 2017 the amount is $255 for qualified parking as described in Rev. Proc. 2011-52. LaMont must include $564 per year into taxable income ($47($302 of the benifit less $255 exclusion) per month into income)