Expert: Don Sadler - 7/9/2009

Question
how do you calculate de minimis?

Answer
‘de minimis’ is a term used to refer to occasional benefits an employee receives that are inconsequential and infrequent in nature,  The whole idea is that they are, by definition, too small to bother with accounting for them.  To speak of calculating ‘de minimis’ is a non sequitur since the IRS considers it too small to account for and this is called an administrative convenience.   

It would be more appropriate to ask “How do you determine if benefits qualify as ‘de minimis’?”  The answer to that lies in the IRS manuals but this except from Wikipedia gives you an idea.  Full link follows.
-----------------------------------
Qualification as a “De Minimis Fringe” Benefit

For property or services to qualify as “de minimis fringe” benefits, it must be unusual or occasional in frequency; and the value cannot be a disguised form of compensation.

Generally, the Internal Revenue Service (“IRS”) considers the following three factors:
1.   the frequency of the benefit;
2.   the value of the benefit; and
3.   the administrative impracticality.

Examples “De Minimis Fringe” Benefits
1. occasional employee use of photocopier if the employer sufficiently controls its use and 85% of its use is for business purposes;
2. occasional typing of personal letters by a company secretary;
3. occasional snacks (e.g. coffee, donuts, candy, etc.);
4. occasional tickets for entertainment or sporting events;
5. holiday and birthday gifts (not cash) with a low fair market value;
6. occasional meal and transportation money when an employee must work overtime;
7. group-term life insurance payable on death of an employee’s spouse or dependent if the face value is no greater than $2000;
8. flowers, fruits, books, etc. provided under special circumstances (e.g. illness or family crisis); and
9. occasional parties or picnics for employees and their guests.

Examples of property or services not "De Minimis Fringe" benefits
1. cash (other than occasional meal or transportation money for overtime work);
2. gift certificates or cash equivalent vouchers;
3. employee discounts;
4. employee achievement awards;
5. season tickets to sporting or theatrical events;
6. membership to a private country club or athletic facility; and
7. certain transportation costs.

Tax Consequences for the Employee
If the property or services provided to the employee qualify as a “de minimis fringe” benefit, then the employee need not report the amount

----------------------------------------
Full link for the above excerpt is http://en.wikipedia.org/wiki/De_minimis_fringe_benefit