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QUICK REFERENCE GUIDE FOR PUBLIC EMPLOYERS <br />The lease value method may be used for any vehicle, and must be used if the conditions <br />for using rule (2) or (3) are not met. It calculates the value of the benefit by determining <br />the annual lease value of the vehicle, as follows: <br />a) Determine the fair market value of the vehicle when first made available. <br />b) Determine the annual lease value (ALV) from the table in Publication 15-B, <br />which is based on a four-year lease term. This value will generally stay the <br />same for each year. If the vehicle remains in service after four years, it must be <br />revalued and the ALV recomputed. <br />c) Multiply the annual lease value by the percentage of personal miles out of the <br />total miles driven by the employee. This is the value of the taxable benefit. <br />2) Cents -Per -Mile Rule <br />To use the vehicle cents -per -mile rule, the one of the following tests must be met: <br />• The employer reasonably expects the vehicle to be regularly used in the trade or <br />business throughout the calendar year, or <br />• The mileage test is met. <br />A vehicle is considered "regularly used in the business" if: <br />1. At least 50% or more of the total annual mileage each year is in the employer's <br />business, or <br />2. It is generally used each workday to transport at least three employees to and <br />from work, in an employer sponsored commuting vehicle pool. <br />The mileage test is met if the vehicle is it is driven by employees at least 10,000 miles <br />(personal and business) per year and use of the vehicle is primarily by employees. <br />The value of the personal use of a vehicle may be figured at 56.5 cents per mile for 2013 <br />if the following conditions are met: <br />If you do not provide fuel, you can reduce the value of the personal use by up to 5.5 cents <br />per mile. <br />To use the cents -per -mile rule, the vehicles cannot have a greater fair market value in the <br />year placed in service than a maximum amount determined by the IRS for each year (for <br />2013, $16,000 for cars and $17,000 for trucks). <br />3) Commuting Valuation Rule <br />Under this rule, you determine the value of a vehicle you provide to an employee (other <br />than a qualified nonpersonal use vehicle, discussed earlier) for commuting by valuing <br />each one-way commute (home to work or work to home) at $1.50. If more than one <br />employee commutes in the vehicle, this value applies to each employee. Unless the <br />11 <br />