Chapter 52
“FRINGE” BENEFITS (SECTION 132)
LEARNING OBJECTIVES:

Have a basic understanding of employee fringe benefits
REVIEW:
This chapter discusses the following employee fringe benefits: employee
discounts; no-additional-cost services; company cafeterias and meal plans;
qualified transportation; qualified retirement planning services; gyms and athletic
facilities; working condition fringes; and de minimis fringes. Advantages, tax
implications, and benefits are covered. The chapter ends with a definition of
highly compensated employees in respect to fringe benefits.
CHAPTER OUTLINE:
I. What Are They?
II. Employee Discounts
A. Advantages
B. Tax Implications
III. No-Additional-Cost Services
A. Advantages
B. Tax Implications
IV. Company Cafeterias And Meal Plans
V. Qualified Transportation
A. Advantages
B. Benefits
VI. Qualified Retirement Planning Services
VII. Gyms and Athletic Facilities
VIII. Working Condition Fringes
IX. De Minimis Fringes
X. Definition of Highly Compensated
XI. Chapter Endnotes
1
Chapter 52
FEATURED TOPICS:
Employee fringe benefits
FIGURES:
Figure 52.1 IRS De Minimis Guidelines
CFP® CERTIFICATION EXAMINATION TOPIC:
Topic 30: Other employee benefits
B. Fringe benefits
COMPETENCY:
Upon completion of this chapter, the student should be able to:
1. Have a basic understanding of employee fringe benefits
DISCUSSION:
1. Discuss advantages, tax implications, and benefits of employee fringe
benefits.
2. Discuss qualification as a de minimis fringe benefit.
KEY WORDS:
Fringe benefits (Internal Revenue Code Section 132)
Employee discounts
No-additional-cost services
Company cafeterias
Meal plans
Qualified transportation
Chapter 52
Qualified retirement planning services
Gyms and athletic facilities
Working condition fringes
De minimis fringes
Commuter highway vehicle
Transit pass
Parking
QUESTIONS:
1. Which of the following meal-related benefits do not result in extra taxable
income to employees?
(1) meals furnished to employees working away from home
(2) IRC Section 119 “on-premises” plan
(3) IRC Section 132(e)(2) “on-or-near” plan
(4) meals for the convenience of the employee
a.
b.
c.
d.
(1) and (2) only
(1), (2), and (3) only
(2), (3), and (4) only
(1), (2), (3), and (4)
Chapter 52, pp. 390, 391
2. Which of the following benefits may be provided as a qualified transportation
fringe benefit?
(1) daily use of a company car for commuting purposes
(2) transportation in a commuter highway vehicle
(3) a transit pass
(4) qualified parking
a.
b.
c.
d.
(1) and (3) only
(2) and (4) only
(1), (2), and (3) only
(2), (3), and (4) only
Chapter 52, pp. 391, 392
Chapter 52
3. Which one of the following is required for an athletic facility to be available to
employees on a tax-free basis?
a.
b.
c.
d.
facility is located on the premises of the employer
use by employees and non-employees is about evenly divided
the facility is operated by a third party
only non-highly compensated employees may use the facility
Chapter 52, pp. 392, 393
4. Which of the following would not be considered taxable as a de minimis fringe
benefit?
(1) commuting use of company car for three days each month
(2) occasional typing of personal letters by company secretary
(3) occasional use of copying machine
(4) local telephone calls
a.
b.
c.
d.
(1) and (3) only
(1), (2), and (3) only
(2), (3), and (4) only
(1), (2), (3), and (4)
Chapter 52, p. 393
ANSWERS:
1. b
2. d
3. a
4. c