Well, here it is…as long as an employer issues cell phones to its employees for work-related purposes — taking client calls, taking calls from the employer, etc… — and not compensatory purposes such as attracting talent or improve the morale of existing employees, the entire value of the cell phone is tax-free to the employee. The business use is a working condition fringe excludable to the employee under Section 132(d), and the personal use is treated as a de minimis fringe benefit excludable to the employee under Section 132(a)(4).
See Notice 2011-72:
This notice provides that, when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the IRS will treat the employee’s use of the cell phone for reasons related to the employer’s trade or business as a working condition fringe benefit, the value of which is excludable from the employee’s income and, solely for purposes of determining whether the working condition fringe benefit provision in section 132(d) applies, the substantiation requirements that the employee would have to meet in order for a deduction under §162 to be allowable are deemed to be satisfied. In addition, the IRS will treat the value of any personal use of a cell phone provided by the employer primarily for noncompensatory business purposes as excludable from the employee’s income as a de minimis fringe benefit.