Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 26
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An employee whose pay is $205,000 or more.
manufactured primarily for use on public streets, roads,
and highways.
•
An employee who owns a 1% or more equity, capi-
tal, or profits interest in your business.
Consistency requirements. If you use the lease value
rule, the following requirements apply.
A control employee for a government employer for 2012
is either of the following.
1. You must begin using this rule on the first day you
•
make the automobile available to any employee for
A government employee whose compensation is
personal use. However, the following exceptions ap-
equal to or exceeds Federal Government Executive
ply.
Level V. See the Office of Personnel Management
website at
for
a. If you use the commuting rule (discussed earlier
2012 compensation information.
in this section) when you first make the automo-
•
An elected official.
bile available to any employee for personal use,
you can change to the lease value rule on the first
Highly compensated employee alternative. Instead
day for which you do not use the commuting rule.
of using the preceding definition, you can choose to define
b. If you use the cents-per-mile rule (discussed ear-
a control employee as any highly compensated employee.
lier in this section) when you first make the auto-
A highly compensated employee for 2012 is an employee
mobile available to any employee for personal
who meets either of the following tests.
use, you can change to the lease value rule on
the first day on which the automobile no longer
1. The employee was a 5% owner at any time during
qualifies for the cents-per-mile rule.
the year or the preceding year.
2. The employee received more than $115,000 in pay
2. You must use this rule for all later years in which you
for the preceding year.
make the automobile available to any employee, ex-
cept that you can use the commuting rule for any
You can choose to ignore test (2) if the employee was not
year during which use of the automobile qualifies.
also in the top 20% of employees when ranked by pay for
the preceding year.
3. You must continue to use this rule if you provide a
replacement automobile to the employee and your
Lease Value Rule
primary reason for the replacement is to reduce fed-
eral taxes.
Under this rule, you determine the value of an automobile
you provide to an employee by using its annual lease
value. For an automobile provided only part of the year,
Annual Lease Value
use either its prorated annual lease value or its daily lease
value.
Generally, you figure the annual lease value of an automo-
bile as follows.
If the automobile is used by the employee in your busi-
ness, you generally reduce the lease value by the amount
1. Determine the fair market value (FMV) of the auto-
that is excluded from the employee’s wages as a working
mobile on the first date it is available to any em-
condition benefit. In order to do this, the employee must
ployee for personal use.
account to the employer for the business use. This is done
2. Using Table 3-1. Annual Lease Value Table, read
by substantiating the usage (mileage, for example), the
down column (1) until you come to the dollar range
time and place of the travel, and the business purpose of
within which the FMV of the automobile falls. Then
the travel. Written records made at the time of each busi-
read across to column (2) to find the annual lease
ness use are the best evidence. Any use of a com-
value.
pany-provided vehicle that is not substantiated as
business use is included in income. The working condition
3. Multiply the annual lease value by the percentage of
benefit is the amount that would be an allowable business
personal miles out of total miles driven by the em-
expense deduction for the employee if the employee paid
ployee.
for the use of the vehicle. However, you can choose to
include the entire lease value in the employee’s wages.
Table 3-1. Annual Lease Value Table
See
Vehicle allocation
rules, under Working Condition
Benefit in section 2.
(1) Automobile FMV
(2) Annual Lease
$ 0 to 999 . . . . . . . . . . . . . . . . . . . . . . . . .
$
600
Automobile. For this rule, an automobile is any
1,000 to 1,999 . . . . . . . . . . . . . . . . . . . . .
850
four-wheeled vehicle (such as a car, pickup truck, or van)
2,000 to 2,999 . . . . . . . . . . . . . . . . . . . . .
1,100
Page 26
Publication 15-B (2012)
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