Assume employee has no W-2 income for a year b/c on leave without pay. Employer provides domestic partner benefits and employee has a domestic partner, so FMV of coverage is imputed income. How does employer meet withholding obligations (fed. inc. & FICA) if there is no cash to withhold from? Anyone ever run into this?

You might use the methodology in PLR 200108010. Although that ruling involved a multiemployer welfare fund, the analogy is there: The participant did not have any income from the welfare fund but the fund had to issue a W-2. There is no income tax withholding. However, the fund (which in your case is the employer) had to pay the participant's share of the FICA tax. The taxable amount on the W-2 was the total of the value of the domestic partner coverage and the participant's share of the FICA.