Question

Michael McBride is an employee of Reach-it Pharmaceuticals. His company car is a 2019 Lexus GS 200t with a fair-market value of $50,000 and a lease value of $13,250, according to Publication 15-b. During the year, Michael drove 45,000 miles, of which 9,000 were for personal use. The car was available for use on 270 of the days during the year. All gasoline was provided by the employer and is charged back to Michael at $0.055 per mile. What is the amount of the company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule

Answer 1

Michael

The amount of the company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule is:

= $1,960.27

Step-by-step explanation:

a) Data and Calculations:

Fair market value of 2019 Lexus GS 200t = $50,000

Lease value of the company car = $13,250

Distance that Michael drove the car during the year = 45,000

Personal use of the car during the year = 9,000

Percentage of personal use = 9,000/45,000 * 100 = 20%

Availability of the car during the year = 270

Gasoline charged back to Michael by the employer = $0.055 * 45,000 * 20%

= $495

Company-car fringe benefit that will appear on Michael's W-2, using the lease-value rule is = $13,250 * 20% * 270/365 = $1,960.27