Publication 15 B - Employer'S Tax Guide To Fringe Benefits

If you have 20 or more automobiles, see section

Annual Lease Value

1.61–21(d)(5)(v) of the regulations. If you and the em-

ployee own or lease the automobile together, see section

Generally, you figure the annual lease value of an automo-

1.61–21(d)(2)(ii) of the regulations.

bile as follows.

You do not have to include the value of a telephone or

1) Determine the fair market value of the automobile on

any specialized equipment added to, or carried in, the

the first date it is available to any employee for per-

automobile if the equipment is necessary for your busi-

sonal use.

ness. However, include the value of specialized equipment

if the employee to whom the automobile is available uses

2) Using the following Annual Lease Value Table,

the specialized equipment in a trade or business other than

read down column (1) until you come to the dollar

yours.

range within which the fair market value of the auto-

Neither the amount the employee considers to be the

mobile falls. Then read across to column (2) to find

value of the benefit nor your cost for either buying or

the annual lease value.

leasing the automobile determines its fair market value.

However, see Safe-harbor value, next.

Annual Lease Value Table

Safe-harbor value. You may be able to use a safe-har-

(1)

(2)

bor value as the fair market value. For an automobile you

Annual

bought at arm’s length, the safe-harbor value is your cost,

Automobile

Lease

including tax, title, and other purchase expenses. You

Fair Market Value

Value

cannot have been the manufacturer of the automobile.

$0 to 999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 600

For an automobile you lease, you can use any of the

1,000 to 1,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

850

2,000 to 2,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,100

following as the safe-harbor value.

3,000 to 3,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,350

4,000 to 4,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,600

1) The manufacturer’s invoice price (including options)

5,000 to 5,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,850

plus 4%.

6,000 to 6,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,100

7,000 to 7,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,350

2) The manufacturer’s suggested retail price minus 8%

8,000 to 8,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,600

(including sales tax, title, and other expenses of

9,000 to 9,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,850

10,000 to 10,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,100

purchase).

11,000 to 11,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,350

3) The retail value of the automobile reported by a na-

12,000 to 12,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,600

13,000 to 13,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,850

tionally recognized pricing source if that retail value

14,000 to 14,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,100

is reasonable for that automobile.

15,000 to 15,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,350

16,000 to 16,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,600

17,000 to 17,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,850

Items included in annual lease value table. Each an-

18,000 to 18,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,100

nual lease value in the table includes the value of mainte-

19,000 to 19,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,350

20,000 to 20,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,600

nance and insurance for the automobile. Do not reduce the

21,000 to 21,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,850

annual lease value by the value of any of these services

22,000 to 22,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,100

that you did not provide. For example, do not reduce the

23,000 to 23,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,350

annual lease value by the value of a maintenance service

24,000 to 24,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,600

25,000 to 25,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,850

contract or insurance you did not provide. (You can take

26,000 to 27,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,250

into account the services actually provided for the automo-

28,000 to 29,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7,750

bile by using the general valuation rule discussed earlier.)

30,000 to 31,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,250

32,000 to 33,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,750

Items not included. The annual lease value does not

34,000 to 35,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,250

include the value of fuel you provide to an employee for

36,000 to 37,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,750

38,000 to 39,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,250

personal use, regardless of whether you provide it, reim-

40,000 to 41,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,750

burse its cost, or have it charged to you. You must include

42,000 to 43,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,250

the value of the fuel separately in the employee’s wages.

44,000 to 45,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,750

You can value fuel you provided at fair market value or at

46,000 to 47,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,250

48,000 to 49,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,750

5.5 cents per mile for all miles driven by the employee.

50,000 to 51,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,250

However, you cannot value at 5.5 cents per mile fuel you

52,000 to 53,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,750

provide for miles driven outside the United States (includ-

54,000 to 55,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,250

ing its possessions and territories), Canada, and Mexico.

56,000 to 57,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,750

58,000 to 59,999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15,250

If you reimburse an employee for the cost of fuel, or

have it charged to you, you generally value the fuel at the

For automobiles with a fair market value of more than

$59,999, the annual lease value equals (.25 × the fair

amount you reimburse, or the amount charged to you if it

was bought at arm’s length.

market value of the automobile) + $500.

If you have 20 or more automobiles, see section

1.61-21(d)(3)(ii)(D) of the regulations.

Fair market value. The fair market value of an automobile

is the amount a person would pay to buy it from a third

If you provide any service other than maintenance and

party, in an arm’s-length transaction, in the area in which

insurance for an automobile, you must add the fair market

the automobile is bought or leased. That amount includes

value of that service to the annual lease value of the

all purchase expenses, such as sales tax and title fees.

automobile to figure the value of the benefit.

Page 20

Publication 15 B - Employer'S Tax Guide To Fringe Benefits - 2002 Page 20

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