Problem 12-49 (LO 12-3) [The following information applies to the questions disp
ID: 2582487 • Letter: P
Question
Problem 12-49 (LO 12-3)
[The following information applies to the questions displayed below.]
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 $306 per month.
a. If LaMont receives one pass (worth $306) each month, how much of this benefit must he include in his gross income each year?
b. If the company provides each employee with $306 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?
Explanation / Answer
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 LaMont must include $612 per year into taxable income ($52($306 of benefits less $255 exclusion) per month into income)