Nonmonetary recognition awards with $100 FMV were not de minimis fringe benefits.

• Author: Fiore, Nicholas J.
• Position: Fair market value - IRS Letter Ruling

The issue is whether nonmonetary recognition awards with a fair market value (FMV) of $100 qualify as de minimis fringes.

A fringe benefit is a form of pay provided to any person for the performance of services. Unless the law states otherwise, employers must include the value of fringe benefits in a recipient's pay. If the recipient of a taxable fringe benefit is an employee, the benefit is subject to employment taxes and the employer must report on Form W-2.

Determination of a fringe benefit's FMV depends on all the facts and circumstances. Generally, the FMV of a fringe benefit is the amount an employee would have to pay a third party in an arm's-length transaction to buy the particular fringe benefit. Neither the amount the employee considers to be the fringe benefit's value nor the cost the employer incurs to provide the benefit determines its FMV.

An employee's wages do not include the value of a de minimis fringe benefit. This benefit is any property or service provided to an employee that has so little value (taking into account how frequently an employer provides similar benefits) that accounting for it would be unreasonable or administratively impracticable. Cash, no matter how little, is never excludible as a de minimis fringe benefit (except for occasional meat money or transportation fare). Examples of de minimis fringes include:

* Occasional typing of personal letters by a company secretary;

* Occasional personal use...