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Brent Bishop is the vice president of operations for Southern Sweets Bakery. He drives a 2019 Toyota Prius Prime as his company car, and it has a fair market value of $37,500. The prorated annual lease value per Publication 15-b for the vehicle is $10,150. He reported driving 35,150 miles during 2019, of which 20 percent were for personal reasons. The company pays his fuel and charges him five cents per mile for fuel charges. Required: Using the lease value rule, what is the valuation of Brent’s company car benefit?

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jepessoa

Answer:

$2,381.50

Explanation:

Prorated annual lease value per publication 15-b  = $10,150

Brent's personal use lease value = $10,150 x 20% = $2,030

Brent's personal use miles = 35,150 miles x 20% = 7,030 miles

Personal use fuel: 7,030 miles x $0.05 per mile = $351.50

Brent's total personal use taxable income: $2,030 + $351.50  = $2,381.50

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