The IRS on December 9, 2020, posted to its website a version of final regulations (T.D. 9939) addressing deduction limitations under section 274 for expenses related to qualified transportation fringe benefits, such as parking. In addition, the final regulations address the deduction elimination for certain commuting expenses paid by employers for their employees.
The final regulations [PDF 375 KB] (70 pages) make a variety of modifications to regulations proposed in June 2020 in response to comments received, including an exception under section 274(e)(8) for parking in rural, industrial or remote areas where the adequate and full consideration to pay for such parking is presumed to be zero as well as an option rule for federally declared disasters.
The final regulations apply to tax years beginning on or after the date the regulations are published in the Federal Register.
This report highlights some of the provisions and certain modifications made to the rules in the final regulations.
1 A federally declared disaster area is defined in section 165(i)(5). A “Federally declared disaster means any disaster subsequently determined by the President of the United States to warrant assistance by the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.” The “disaster area” means the area so determined to warrant assistance. An election under section 165(i) is not necessary to use this optional rule in the section 274 regulations.
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