Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 24
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33Cents-Per-Mile Rule
3. Fringe Benefit Valuation
Under this rule, you determine the value of a vehicle you
Rules
provide to an employee for personal use by multiplying the
standard mileage rate by the total miles the employee
drives the vehicle for personal purposes. Personal use is
This section discusses the rules you must use to determine
any use of the vehicle other than use in your trade or
the value of a fringe benefit you provide to an employee.
business. This amount must be included in the employee’s
You must determine the value of any benefit you cannot
wages or reimbursed by the employee. For 2012, the
exclude under the rules in section 2 or for which the
standard mileage rate is 55.5 cents per mile.
amount you can exclude is limited. See
Including taxable
You can use the cents-per-mile rule if either of the
benefits in pay
in section 1.
following requirements is met.
In most cases, you must use the general valuation rule
•
to value a fringe benefit. However, you may be able to use
You reasonably expect the vehicle to be regularly
a special valuation rule to determine the value of certain
used in your trade or business throughout the calen-
benefits.
dar year (or for a shorter period during which you
own or lease it).
This section does not discuss the special valuation rule
used to value meals provided at an employer-operated
•
The vehicle meets the mileage test.
eating facility for employees. For that rule, see Regulations
section 1.61-21(j). This section also does not discuss the
special valuation rules used to value the use of aircraft. For
those rules, see Regulations sections 1.61-21(g) and (h).
Maximum automobile value. You cannot use
The fringe benefit valuation formulas are published in the
!
the cents-per-mile rule for an automobile (any
Internal Revenue Bulletin as Revenue Rulings twice during
four-wheeled vehicle, such as a car, pickup truck,
CAUTION
the year. The formula applicable for the first half of the year
or van) if its value when you first make it available to any
is usually available at the end of March. The formula
employee for personal use is more than an amount deter-
applicable for the second half of the year is usually avail-
mined by the IRS as the maximum automobile value for the
able at the end of September.
year. For example, you cannot use the cents-per-mile rule
for an automobile that you first made available to an em-
General Valuation Rule
ployee in 2011 if its value at that time exceeded $15,300
for a passenger automobile or $16,200 for a truck or van.
You must use the general valuation rule to determine the
The maximum automobile value for 2012 will be published
value of most fringe benefits. Under this rule, the value of a
in a revenue procedure in the Internal Revenue Bulletin
fringe benefit is its fair market value.
early in 2012. If you and the employee own or lease the
automobile together, see Regulations section
1.61-21(e)(1)(iii)(B).
Fair market value. The fair market value (FMV) of a fringe
benefit is the amount an employee would have to pay a
Vehicle. For the cents-per-mile rule, a vehicle is any mo-
third party in an arm’s-length transaction to buy or lease
torized wheeled vehicle, including an automobile, manu-
the benefit. Determine this amount on the basis of all the
factured primarily for use on public streets, roads, and
facts and circumstances.
highways.
Neither the amount the employee considers to be the
value of the fringe benefit nor the cost you incur to provide
Regular use in your trade or business. A vehicle is
the benefit determines its FMV.
regularly used in your trade or business if at least one of
the following conditions is met.
Employer-provided vehicles. In general, the FMV of an
•
At least 50% of the vehicle’s total annual mileage is
employer-provided vehicle is the amount the employee
for your trade or business.
would have to pay a third party to lease the same or similar
•
You sponsor a commuting pool that generally uses
vehicle on the same or comparable terms in the geo-
the vehicle each workday to drive at least three em-
graphic area where the employee uses the vehicle. A
ployees to and from work.
comparable lease term would be the amount of time the
vehicle is available for the employee’s use, such as a
•
The vehicle is regularly used in your trade or busi-
1-year period.
ness on the basis of all of the facts and circum-
Do not determine the FMV by multiplying a
stances. Infrequent business use of the vehicle,
cents-per-mile rate times the number of miles driven un-
such as for occasional trips to the airport or between
less the employee can prove the vehicle could have been
your multiple business premises, is not regular use
leased on a cents-per-mile basis.
of the vehicle in your trade or business.
Page 24
Publication 15-B (2012)
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