The IRS has updated the standard industry fare level (SIFL) rates (Rev. Rul. 2024-08) used for calculating the imputed income to service providers using employer-provided aircraft from January through June 2024.
An employer is generally required to impute income to a service provider such as an employee, independent contractor, partner, or board member (hereinafter collectively referred to as an “employee”), who uses an employer-provided aircraft for personal purposes. No imputed income is required for an employer-provided flight for the employer’s business purposes. These flights are generally excludible from the employee’s income as a working condition fringe benefit.
If a flight using an employer-provided aircraft is for the employee’s personal use, then the amount includable in an employee’s income is based on either the fair market value of the transportation at fair market charter rates, or the Standard Industry Fare Level (SIFL) rates. Note that most personal flights are valued using the SIFL rates, which generally are significantly lower than charter rates.
The SIFL-rate method generally includes the following three steps:
- Multiply the number of miles for the flight by the applicable “SIFL rates” prescribed by the IRS semi-annually for the period in which the flight occurred.
- Multiply the amount determined in Step (1) by the applicable “aircraft multiple” prescribed in the IRS regulations, which is based on the maximum certified takeoff weight of the aircraft and the employee’s control or non-control status.
- To the amount determined in Step (2), add the applicable terminal charge prescribed by the IRS semi-annually for the period in which the flight occurred.
The SIFL rates which are used in Step 1 and the $55.05 terminal charge which is used for Step 3 for flights taken in the period from Jan. 1, 2024, to June 30, 2024, are as follows:
- Up to 500 miles = $.3012 per mile
- 501 to 1,500 miles = $.2296 per mile
- More than 1,500 miles = $.2208 per mile
The 2024 beginning-of-the-year rates update the 2023 year-end rates and $52.98 terminal charge (for the period from July 1, 2023, to Dec. 31, 2023) as previously provided in Rev. Rul. 2023-19:
- Up to 500 miles = $.2898 per mile
- 501 to 1,500 miles = $.2210 per mile
- More than 1,500 miles = $.2124 per mile
The Department of Transportation (DOT) published multiple versions of SIFL rates to account for COVID-19-related government relief received by the airlines. However, the DOT ceased releasing the COVID-19 SIFL rates in the first half of 2023.
Grant Thornton Insight
The IRS recently announced plans to begin dozens of audits of aircraft usage by large corporations, large partnerships and high-income individual taxpayers to determine if personal use is treated properly. Taxpayers should assess their supporting contemporaneous documentation to ensure they have adequate records to properly classify and support the deductible use and that they have considered other complex interactions such as the impact on income to the passengers, as well as other limitation and recapture provisions.
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