California Revenue and Taxation Code § 24343.5

(a) In addition to the deduction allowed by Section 24343, a deduction shall be allowed to an employer as an ordinary and necessary expense paid or incurred during the taxable year in carrying on any trade or business for those expenses involved in any of the following ridesharing arrangements: (1) Subsidizing employees commuting in vanpools. (2) Subsidizing employees commuting in private commuter buses or buspools. (3) Subsidizing monthly transit passes for its employees or for use by the employee’s dependents, except that no deduction shall be allowed for transit passes issued for the use of elementary and secondary school students. (4) Subsidizing employees commuting in subscription taxipools. (5) Subsidizing employees commuting in a carpool. (6) In the case of an employer who offers free parking to its employees, offering a cash equivalent to employees who do not require parking, including a parking cash-out program, as defined by subdivision (f) of Section 65088.1 of the Government Code. (7) Providing free or preferential parking to carpools, vanpools, or any other vehicle used in a ridesharing arrangement. (8) Making facility improvements to encourage employees, for the purpose of commuting from their homes, to participate in ridesharing arrangements, to use bicycles, or to walk. These facility improvements may include, but are not limited to, any of the following: the construction of bus shelters; the installation of bicycle racks and other bicycle-related facilities, such as showers and locker rooms; and parking lot modifications to provide carpools, vanpools, or buspools with preferential treatment. The cost of these facility improvements shall be allowed as a depreciation deduction. Notwithstanding subdivision (c), the depreciation deduction shall be allowable over a 36-month period. (9) Providing company commuter van or bus service to its employees and to others for commuting from their homes, but not for transportation required as part of the employer’s business activities, except as otherwise provided in this section. The capital costs of providing this service shall not be an eligible deduction under this section. (10) Providing to employees transportation services which are required as part of the employer’s business activities to the extent that the transportation would be provided by employees without reimbursement in the absence of an employer-sponsored ridesharing incentive program. The capital costs of providing this service shall not be an eligible deduction under this section. (b) For purposes of this section: (1) “Employer” means either of the following: (A) A taxpayer for whom services are performed by employees, except entities which are not subject to tax under this part. (B) A taxpayer which is a private or public educational institution which enrolls students at higher than the secondary level. (2) “Employee” means either of the following: (A) An individual who performs service for an employer for more than eight hours per week for remuneration. (B) Any commuting student, as defined in paragraph (3). (3) “Commuting student” means a registered full-time student at a college, university, or other postsecondary educational institution, who lives apart from the property which is designated as the “employment site” for the purpose of this section, and who travels between his or her residence and the designated employment site on a regular, though not necessarily daily, basis. (4) “Employer-sponsored ridesharing incentive program” means a program undertaken by an employer either alone or in cooperation with other employers to encourage or provide, or both, fiscal other incentives to employees to make the home-to-work commute trip by any mode other than the single-occupant motor vehicle. (5) “Company commuter bus or van” means a highway vehicle which meets all of the following criteria: (A) Has at least seven or more persons commuting on a daily basis to and from work. (B) At 

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