Required information Problem 12-49 (LO 12-3) The following information applies t

Question

Required information 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 $296 per month Problem 12-49 Part a a. If LaMont receives one pass (worth $296) each month, how much of this benefit must he include in his gross income each year? Transit pass benefit to be included in gross income

Explanation / Answer

a) Under section 132 (f) (5) (A), an employer may exclude transit passes as a qualified transportation fringe benefits. For 2018, the amount for excluding qualified transportation fringe benefits is $260 per month. LaMont must include $36 per month ($296 - $260) or $432 per year into taxable income.

Therefore transit pass benefit to be included in gross income is $432 per year.

b) Under section 132 (f) (5) (C), an employer may exclude Qualified parking as a qualified transportation fringe benefits. For 2018, the amount for excluding qualified parking is also $260 per month. LaMont must include $36 per month ($296 - $260) or $432 per year into taxable income.

Therefore transit parking benefit to be included in gross income is also $432 per year.

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