Solved: Taxable Business Vehicles? Taxable Accountable Plans?

TaxGuyBill · ‎12-06-2019

I haven't had time to really research this yet, but I hope my brain is scrambled and I'm missing something obvious ...

With the new law eliminating Employee Job Expenses on Schedule A, will it be fully taxable to the employee if a taxpayer uses a company vehicle for business purposes?

The second paragraph sounds like an Accountable Plan ... will that be taxable to the employee?

Publication 15b:

Working Condition Benefits

This exclusion applies to property and services you provide to an employee so that the employee can perform his or her job. It applies to the extent the employee could deduct the cost of the property or services as a business expense or depreciation expense if he or she had paid for it. The employee must meet any substantiation requirements that apply to the deduction. Examples of working condition benefits include an employee's use of a company car for business, an employer-provided cell phone provided primarily for noncompensatory business purposes, and job-related education provided to an employee.

This exclusion also applies to a cash payment you provide for an employee's expenses for a specific or prearranged business activity for which a deduction is otherwise allowable to the employee. You must require the employee to verify that the payment is actually used for those expenses and to return any unused part of the payment.

For information on deductible employee business expenses, see Unreimbursed Employee Expenses in Pub. 529.

https://www.irs.gov/publications/p15b#en_US_2017_publink1000193758

TaxMonkey · ‎12-06-2019

He is essentially asking if the changes to IRC 67 effect IRC 62(2)(a) which reads:

(A)Reimbursed expenses of employees

The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies.

In my opinion, they do not, since the expense is authorized under IRC 162, even if IRC 67 has been changed to make it not deductible.

View solution in original post

TaxMonkey · ‎12-06-2019

He is essentially asking if the changes to IRC 67 effect IRC 62(2)(a) which reads:

(A)Reimbursed expenses of employees

The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies.

In my opinion, they do not, since the expense is authorized under IRC 162, even if IRC 67 has been changed to make it not deductible.

TaxGuyBill · ‎12-06-2019

Thanks for pointing me in the right direction.

The Code and Regs specifically say that Working Condition Fringes (§132(d)) are based on §162 and §167. The wording in the Publication made it sound like it would changes things, but I should have dug into the Code and Regs before panicking.

qbteachmt · ‎12-06-2019

It isn't clear what is your actual question.

Accountable Plan activity is not taxable, since it is Accountable = proven.

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qbteachmt · ‎12-06-2019

Here is why I got confused:

This phrase: "A)Reimbursed expenses of employees The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee,"

And this:

"Examples of working condition benefits include an employee's use of a company car for business, an employer-provided cell phone provided primarily for noncompensatory business purposes, and job-related education provided to an employee."

Are not really the same.

An employee using the company car for business is Never going to be reimbursed, so there is no consideration as to that taxable status or a reimbursement that isn't warranted, because it already was the company car.

One seems to be, "Are these employer-paid or provided things a taxable value to the employee?"

The other seems to be "handling the fact that the Employee had to pay, personally."

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TaxMonkey · ‎12-06-2019

Yes the original question was really on two separate subjects. Reimbursements under an accountable plan - such reimbursing an employee for use of their personal vehicle and Working condition fringe benefits such as providing a company car to employees.

Taxable Business Vehicles? Taxable Accountable Plans?

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