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1. You must begin using this rule on the first day you
<br />make the automobile available to any employee for
<br />personal use. However, the following exceptions ap-
<br />ply.
<br />a. If you use the commuting rule (discussed earlier)
<br />when you first make the automobile available to
<br />any employee for personal use, you can change
<br />to the lease value rule on the first day for which
<br />you do not use the commuting rule.
<br />b. If you use the cents-per-mile rule (discussed ear-
<br />lier) when you first make the automobile available
<br />to any employee for personal use, you can
<br />change to the lease value rule on the first day on
<br />which the automobile no longer qualifies for the
<br />cents-per-mile rule.
<br />(1} Automobile FMV (2) Annual Lease
<br />23,000 to 23,999 ............... ..... 6,350
<br />24,000 to 24,999 ............... ..... 6,600
<br />25,000 to 25,999 ............... ..... 6,850
<br />26,000 to 27,999 ............... ..... 7,250
<br />28,000 to 29,999 ............... ..... 7,750
<br />30,000 to 31,999 ............... ..... 8,250
<br />32,000 to 33,999 ............... ..... 8,750
<br />34,000 to 35,999 ............... ..... 9,250
<br />36,000 to 37,999 ............... ..... 9,750
<br />38,000 to 39,999 ............... ..... 10,250
<br />40,000 to 41,999 ............... ..... 10,750
<br />42,000 io 43,999 ............... ..... 11,250
<br />44,000 to 45,999 ............... ..... 11,750
<br />46,000 to 47,999 ........... . ... ..... 12,250
<br />48,000 to 49,999 ............... ..... 12,750
<br />50,000 to 51,999 ............... ..... 13,250
<br />52,000 to 53,999 ............... ..... 13,750
<br />54,000 to 55,999 ............... ..... 14,250
<br />56,000 to 57,999 ............... ..... 14,750
<br />58,000 to 59;999 ............... .... . 15,250
<br />2. You must use this rule for all later years in which you For automobiles with a FMV of more than $59,999, the
<br />make the automobile available to any employee, ex- annual lease value equals (.25 x the FMV of the automo-
<br />cept that you can use the commuting rule for any bile) + $500.
<br />year during which use of the automobile qualifies.
<br />3. You must continue to use this rule if you provide a
<br />replacement automobile to the employee and your
<br />primary reason for the replacement is to reduce fed-
<br />eral taxes.
<br />Annual Lease Value
<br />Generaliy, you figure the annual lease value of an automo-
<br />bile as follows.
<br />1. Determine the fair market value (FMV) of the auto-
<br />mobile on the first date it is available to any em-
<br />ployee for personal use.
<br />2. Using Table 3-1. Annual Lease Value Table, read
<br />down column (1) until you come to the dollar range
<br />within which the FMV of the automobile falls. Then
<br />read across to column (2) to find the annual lease
<br />value.
<br />Table 3-1. Annual Lease Value Table
<br />(1) Automobile FMV
<br />$ 0 to 999 ........................ .
<br />1,000 to 1,999 .................... .
<br />2.000 to 2,999 .................... .
<br />3,000 to 3,999 .................... .
<br />4,000 to 4,999 .............. . ..... .
<br />5,000 to 5,999 .................... .
<br />6,000 to 6,999 .................... .
<br />7,000 to 7,999 .................... .
<br />8,000 to 8,999 ..................... .
<br />9.000 to 9,999 .................... .
<br />10,000 to 10,999 ................... .
<br />11,000 to 11,999 ................... .
<br />12,000 to 12,999 ................... .
<br />13,000 to 13,999 ................... .
<br />14,000 to 14,999 ................... .
<br />15,000 to 15,999 ................... .
<br />16,000 to 16,999 ................... .
<br />17,000 to 17,999 ................... .
<br />18,000 to 18,999 ................... .
<br />19,000 to 19,999 ................... .
<br />20,000 to 20,999.... ............ .
<br />21,000 to 21,999 ................... .
<br />22,000 to 22,999 ................... .
<br />(2) Annual Lease
<br />600
<br />850
<br />1.100
<br />1.350
<br />1,600
<br />1,850
<br />2,100
<br />2,350
<br />2,600
<br />2,850
<br />3,100
<br />3,350
<br />3,600
<br />3.850
<br />4.100
<br />4,350
<br />4,600
<br />4,850
<br />5,100
<br />5,350
<br />5.600
<br />5,850
<br />6,100
<br />FMV. The FMV of an automobile is the amount a person
<br />would pay to buy it from a third party in an arm's-length
<br />transaction in the area in which the automobile is bought or
<br />leased. That amount includes all purchase expenses, such
<br />as sales tax and title fees.
<br />If you have 20 or more automobiles, see Regulations
<br />section 1.61-21(d)(5)(v). If you and the employee own or
<br />lease the automobile together, see Regulations section
<br />1.61-21(d)(2)(ii).
<br />You da not have to include the value of a telephone or
<br />any specialized equipment added to, or carried in, the
<br />automobile if the equipment is necessary for your busi-
<br />ness. However, include the value of specialized equipment
<br />if the employee to whom the automobile is available uses
<br />the specialized equipment in a trade or business other than
<br />yours.
<br />Neither the amount the employee considers to be the
<br />value of the benefit nor your cost for either buying or
<br />leasing the automobile determines its FMV. However, see
<br />Safe-harbor value, next.
<br />Safe-harbor value. You may be able to use a
<br />safe-harbor value as the FMV.
<br />Far an automobile you bought at arm's length, the
<br />safe-harbor value is your cost, including sales tax, title, and
<br />other purchase expenses. You cannot have been the man-
<br />ufacturer of the automobile.
<br />For an automobile you lease, you can use any of the
<br />following as the safe-harbor value.
<br />• The manufacturer's invoice price (including options)
<br />plus 4%.
<br />• The manufacturer's suggested retail price minus 8%
<br />(including saes tax, title, and other expenses of
<br />purchase).
<br />• The retail value of the automobile reported by a
<br />nationally recognized pricing source if that retail
<br />value is reasonable for the automobile.
<br />Items included in annual lease value table. Each an-
<br />nual lease value in the table includes the value of mainte-
<br />nance and insurance far the automobile. Do not reduce the
<br />annual lease value by the value of any of these services
<br />Page 22 Publication 15-8 (2008)
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