When determining the value of employer-provided parking, which valuation method is allowed?

• A. Lower of employee's cost or fair market value
• B. Employer's cost
• C. Fair market value
• D. Employee's cost

Answer: (D)

The value of employer-provided parking is based on the employee’s own cost for parking. This approach measures the actual economic benefit the employee receives—the amount the employee would have to pay for parking if they didn’t receive it as a fringe benefit. Using the employee’s cost ensures the valuation reflects the real financial advantage to the employee, rather than the employer’s expense or the market value of parking. The other methods would either exaggerate the benefit by using FMV or rely on the employer’s cost, which doesn’t represent the employee’s personal economic gain.