Rev. Rul. 86-65

Caution: Superseded by 86-123

FRINGE BENEFITS; AIRCRAFT VALUATION FORMULA

Published: May 12, 1986

Section 61.-Gross Income Defined

  Fringe benefits; aircraft valuation formula. For purposes of section 1.61-

2T(g) of the temporary regulations, relating to the rule for valuing noncommercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) cents-per-mile rates and the terminal charge in effect on December

31, 1985, are set forth.

  For purposes of fringe benefit taxation under section 61 of the Internal Revenue Code, section 1.61-2T(g) of the Temporary Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61-2T(g)(5) of the temporary regulations sets forth an aircraft valuation formula to determine the value of such flights. The value of a flight is determined by multiplying the base aircraft valuation formula for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61-2T(g)(7) and then adding the applicable terminal charge. The value of a particular flight during the first 6 months of a calendar year is determined by using the base aircraft valuation formula

(also known as the Standard Industry Fare Level formula or SIFL) and the terminal charge in effect on December 31 of the preceding year. The value of a particular flight during the last 6 months of a calendar year is determined by using the SIFL formula and terminal charge in effect on June 30 of that year. The SIFL cents-per-mile rates in the formula and the terminal charge are calculated by the Department of Transportation and are revised semi-annually.

  The Department of Transportation has determined that the terminal charge in effect on December 31, 1985, is $26.19 and the SIFL formula in effect on December 31, 1985, is $.1433 per mile for the first 500 miles, $1.092 per mile for miles between 501 and 1500, and $1.050 per mile for miles over 1500.

Rev. Rul. 86-65, 1986-1 C.B. 9, 1986-19 I.R.B. 5.