Do individual photons increase entropy as they travel? If I draw a control volume around a single light wave traveling through empty space, is entropy increasing as it goes?  How is the degradation of the quality of energy manifested?
 A: No, light propagating through space doesn't increase entropy. It's generally considered to be a reversible process, for the simple reason that a suitably curved mirror can be used to restore the initial state. Instead, entropy is produced when light is absorbed or emitted from any surface or volume. 
In the ideal case of a black body, the entropy produced by emission is $\frac{4}{3}\frac{J}{T}$, where $T$ is the temperature of the body and $J$ is the net rate of emission, in $\mathrm{Js^{-1}}$. This entropy is associated with the light radiating away from the black body, and its entropy doesn't change until it is absorbed by another body.
A: Entropy is a statistical quantity. There is little meaning to the entropy of a single photon, just as there is little meaning to the entropy of a single gas molecule. One could argue that if the state of the photon is known, its entropy is 0 and therefore so is the change of entropy which at least doesn't violate $\Delta S\ge 0$. However, the second law really only holds for statistical ensembles.
