Publication 15-B - Employer'S Tax Guide To Fringe Benefits - 2012 Page 28
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33Daily Lease Value
December 31 of the fourth full calendar year following that
date.
If you provide an automobile to an employee for a continu-
Figure the annual lease value for each later 4-year
ous period of less than 30 days, use the daily lease value
period by determining the FMV of the automobile on Janu-
to figure its value. Figure the daily lease value by multiply-
ary 1 of the first year of the later 4-year period and select-
ing the annual lease value by a fraction, using four times
ing the amount in column (2) of the table that corresponds
the number of days of availability as the numerator and
to the appropriate dollar range in column (1).
365 as the denominator.
Using the special accounting rule. If you use the
However, you can apply a prorated annual lease value
special accounting rule for fringe benefits discussed in
for a period of continuous availability of less than 30 days
section 4, you can figure the annual lease value for each
by treating the automobile as if it had been available for 30
later 4-year period at the beginning of the special account-
days. Use a prorated annual lease value if it would result in
ing period that starts immediately before the January 1
a lower valuation than applying the daily lease value to the
date described in the previous paragraph.
shorter period of availability.
For example, assume that you use the special account-
ing rule and that, beginning on November 1, 2011, the
Unsafe Conditions Commuting Rule
special accounting period is November 1 to October 31.
You elected to use the lease value rule as of January 1,
Under this rule, the value of commuting transportation you
2012. You can refigure the annual lease value on Novem-
provide to a qualified employee solely because of unsafe
ber 1, 2015, rather than on January 1, 2016.
conditions is $1.50 for a one-way commute (that is, from
home to work or from work to home). This amount must be
Transferring an automobile from one employee to an-
included in the employee’s wages or reimbursed by the
other. Unless the primary purpose of the transfer is to
employee.
reduce federal taxes, you can refigure the annual lease
value based on the FMV of the automobile on January 1 of
You can use the unsafe conditions commuting rule for
the calendar year of transfer.
qualified employees if all of the following requirements are
met.
However, if you use the special accounting rule for
fringe benefits discussed in section 4, you can refigure the
•
The employee would ordinarily walk or use public
annual lease value (based on the FMV of the automobile)
transportation for commuting.
at the beginning of the special accounting period in which
•
You have a written policy under which you do not
the transfer occurs.
provide the transportation for personal purposes
other than commuting because of unsafe conditions.
Prorated Annual Lease Value
•
The employee does not use the transportation for
personal purposes other than commuting because of
If you provide an automobile to an employee for a continu-
unsafe conditions.
ous period of 30 or more days but less than an entire
calendar year, you can prorate the annual lease value.
These requirements must be met on a trip-by-trip basis.
Figure the prorated annual lease value by multiplying the
annual lease value by a fraction, using the number of days
Commuting transportation. This is transportation to or
of availability as the numerator and 365 as the denomina-
from work using any motorized wheeled vehicle (including
tor.
an automobile) manufactured for use on public streets,
If you provide an automobile continuously for at least 30
roads, and highways. You or the employee must buy the
days, but the period covers 2 calendar years (or 2 special
transportation from a party that is not related to you. If the
accounting periods if you are using the special accounting
employee buys it, you must reimburse the employee for its
rule for fringe benefits discussed in section 4), you can use
cost (for example, cab fare) under a bona fide reimburse-
the prorated annual lease value or the daily lease value.
ment arrangement.
If you have 20 or more automobiles, see Regulations
section 1.61-21(d)(6).
Qualified employee. A qualified employee for 2012 is
If an automobile is unavailable to the employee because
one who:
of his or her personal reasons (for example, if the em-
•
Performs services during the year;
ployee is on vacation), you cannot take into account the
periods of unavailability when you use a prorated annual
•
Is paid on an hourly basis;
lease value.
•
Is not claimed under section 213(a)(1) of the Fair
You cannot use a prorated annual lease value if
Labor Standards Act (FLSA) of 1938 (as amended)
!
the reduction of federal tax is the main reason the
to be exempt from the minimum wage and maximum
automobile is unavailable.
hour provisions;
CAUTION
Page 28
Publication 15-B (2012)
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