Rev. Rul. 87-28

1987-1 C.B. 21, 1987-15 I.R.B. 5.

FRINGE BENEFITS; AIRCRAFT VALUATION FORMULA

Published: April 13, 1987

Section 61.-Gross Income Defined, 26 CFR 1.61-2T: Taxation of fringe benefits

  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 charges in effect on December 31, 1986, and for prior periods are set forth. Rev. Rul. 86-123 superseded.

  For purposes of the taxation of fringe benefits 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 vale of such flights. The value of a flight is determined under the base aircraft formula (also know as the Standard Industry Fare Level formula or SIFL) by multiplying the SIFL cents- per-mile rates applicable 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 SIFL rates and terminal charge in effect 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 rates and terminal charge in effect on June 30 of that year.

  The terminal charge in effect on December 31, 1986, is $23.80 and the SIFL rates in effect December 31, 1986, are $.1302 per mile for the first 500 miles, $.0993 per mile for miles between 501 and 1500, and $.0954 per mile for miles over 1500.

  The following chart sets forth the cumulative terminal charges and SIFL mileage rates:

                 Terminal
    Period        Charge          SIFL Mileage Rates
1/1/85-6/30/85   $27.05    Up to 500 miles = $.1480 per mile
                           501-1500 miles = $.1128 per mile
                           Over 1500 miles = $.1085 per mile
7/1/85-12/31/85  $25.62    Up to 500 miles = $.1402 per mile
                           501-1500 miles = $.1069 per mile
                           Over 1500 miles = $.1028 per mile
1/1/86-6/30/86   $26.19    Up to 500 miles = $.1433 per mile
                           501-1500 miles = $.1092 per mile
                           Over 1500 miles = $.1050 per mile
7/1/86-12/31/86  $26.02    Up to 500 miles = $.1423 per mile
                           501-1500 miles = $.1085 per mile
                           Over 1500 miles = $.1043 per mile
1/1/87-6/30/87   $23.80    Up to 500 miles = $.1302 per mile
                           501-1500 miles = $.0993 per mile
                           Over 1500 miles = $.0954 per mile

  EFFECT ON OTHER REVENUE RULING

  Rev. Rul. 86-123, 1986-43 I.R.B. 4, is superseded.

Rev. Rul. 87-28, 1987-1 C.B. 21, 1987-15 I.R.B. 5