I feel this is a trick question, especially since it is coming from you Bob.  However, I'm feeling pretty good this Monday morning so I'm going to throw in my answer.

I think the employer should include all of what they reimbursed as taxable wages.  Wouldn't the company paying for this be considered a taxable fringe benefit?      The amount the employee might be able to deduct on their taxes shouldn't factor into what is considered taxable.