Spring 2018 issue of Horizons

This includes expenses related to commuter highway vehicles, transit passes and qualified parking. Perhaps the most critical effect of this provision is that employers will no longer be able to provide qualified parking benefits on a pre-tax basis while still getting the deduction for the costs incurred. Employers should review the details of parking arrangements with their employees to determine whether a change is warranted. Choosing to continue providing qualified parking benefits to employees on a pre-tax or tax-free basis will result in a loss of the deduction for the employer. Possible alternatives employers should consider include eliminating the qualified parking program and its associated costs or including the value of the benefit in each employee’s taxable wages. Under the latter scenario, the employer would be eligible for the deduction as a general compensation expense. Furthermore, to ease the tax burden from the loss of the previously tax-free benefit, the employer can “gross up” each affected employee’s compensation by the amount of the additional tax due.

In 2018 there is a new deduction, generally equaling 20 % of qualified business income.

appropriate value to assign to these qualified parking benefits. For example, many employers own or lease the parking surface or facility used by their employees. It’s unclear at this time exactly how these employers are expected to calculate the portion of depreciation or lease expense allocable to qualified parking provided to employees as a fringe benefit. This is one of several areas of the new law where additional guidance is needed. Alternative Minimum Tax Alternative minimum tax is still applicable for individuals but the exemption and the phase-out thresholds are increased under the new law. RubinBrown expects the IRS to issue further guidance and clarification of the new legislation in the coming months.

The mechanics of this provision are further complicated when trying to determine the

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Kristin Bettorf, CPA Partner Law Firms Services Group 314.290.3416 kristin.bettorf@rubinbrown.com

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Spring 2018

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