September 17, 2019 - Douglas Myser

Automobile fleet regulations. Notice 2019-08, is the notice under Section 1.61-21(d) that shows the proposed IRS regulations updating the fleet average and vehicle cents per mile valuation, which are described in detail. To align the limitations on the maximum vehicle fair market values for use of these special valuation rules with recent statutory changes made to the depreciation limitations in Section 280F. Consistent with the substantial increase in the dollar limitations on depreciation deductions under Sec. 280F (a), the proposed regulations increase, effective for the 2018 calendar year, the maximum base FMV of a vehicle for use of the fleet average of vehicle cents per mile valuation rule to $50,000. The proposed regulations provide that this $50,000 base value will be adjusted annually for inflation using Sec. 280F(d)(7) for 2019 and subsequent years. As noted in the proposed regulations preamble, Notice 2019-34 provides that the inflation adjusted amount for 2019 is $50,400. Automobile fleet regulations.

When an employer provides an employee with a vehicle that he or she can drive for personal use, the employee must include the value of the personal use in his or her income. Two methods may be used to calculate the value of an employee's personal use of an employer provided vehicle (as long as certain requirements are met), the cents per mile valuation rule and the fleet average rule. These methods are not permitted if the FMV of the vehicle exceeds specified base values on the first date the vehicle is made available to the employee. Automobile fleet regulations.

The proposed regulations also contain transition rules for employers that were not able to use the fleet average valuation rule or the cents per mile valuation rule, or were not able to switch from the commuting valuation rule of Regs. Sec. 1.61-21(f) to the cents per mile rule, for vehicles placed in service before calendar year 2018, because of the maximum FMV of a vehicle requirement in Regs. Sec. 1.51.21(e) in the case of the cents per mile valuation rule.

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