My company is shutting down an office. They want to add some sort of value to employee W2s if they take desks, chairs, monitors, etc. Assets have $0 NBV. Is there a cost?

[brianmb62-gmail-]

What value do we assign to those assets? Hw would we determine that value? If the company is willing to leave the assets wouldn't they be $0 assets?

[Carl]

Typically, the value assigned would be whatever amount is left to be depreciated on the asset. But any value within reason can be given to an item. Most likely, its being considered a "distribution of assets" so the company can write them off on the corporate tax return.

[brianmb62-gmail-]

Thanks for the response. I understand the business side. But if the book value is $0 to the company, is there a tax impact to the employee who receives that asset if its given to them?

[Carl]

Sounds to me like the company is treating it as part of your compensation package. Therefore, they can assign any value they want to it really.

Hey, if a company wants to give me furniture and value it at say, $1000, I have no problem paying $200 in taxes on that. I'll come out ahead when I sell the stuff for more than $200 at the yard sale I'd be having shortly after acquiring the furniture.

[Hal_Al]

On your W-2, they should report the fair market value (FMV) of the item.  Even though the book value, for them  is 0, the "compensation" you receive is the FMV and that is "income" to you. 

[brianmb62-gmail-]

Makes sense. Could the company value the assets at $0 as they would be willing to leave them or trash them? What other process would they use to value the assets?

[brianmb62-gmail-]

How would they come up with the Fair Value? Could that be $0 considering they would be willing to leave the items or trash them?

[Carl]

How would they come up with the Fair Value?

Any way they please. Typically, when it comes to the value or cost of an item, that is determined by one thing and one thing only.... "What the consumer is willing to pay". But again, they can basically assign any value they want. If you don't agree to it, then don't accept the item. It really is that simple.

[Opus 17]

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@brianmb62-gmail- wrote:

Makes sense. Could the company value the assets at $0 as they would be willing to leave them or trash them? What other process would they use to value the assets?

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The IRS has an entire publication on this, although it is in the context of valuing charitable donations the principles will be the same.

https://www.irs.gov/publications/p561#en_US_201911_publink1000257933

Fair market value.

Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

I suppose there is still some leeway, since you could determine FMV as "what if I listed the items on Craigslist", or "what if I sold the items to a company that specifically buys and resells used office items".  If you assign a FMV of $0 based on "what if I offered the items at a garage sale at midnight and forgot to advertise", I think the IRS would probably object if they audited your company or your employees.

If your employees want the items, then presumably they have some actual value.  Don't play games.

And, since the value of the items would be considered taxable income, remember that it will also be subject to social security and medicare taxes to both the company and the employee.