In that case, the taxpayer had used the special SIFL
valuation rules applicable to flights on noncommercial aircraft under Treas.
The use of SIFL
valuation guidelines was announced in some detail in a Senate Finance Committee report (152) accompanying 1985 legislation principally concerned with eliminating a requirement of contemporaneous recordkeeping of business automobile usage.
rates and the terminal charge are calculated by the Department of Transportation and revised semi-annually.
61-21(b) and (g), an employee must recognize income to the extent of a trip's FMV or a value computed using the SIFL
61-21(g) (known as the Standard Industry Fare Level or SIFL
rules) to determine the value of the executives' entertainment trips.
15) Thus, since the applicable SIFL
valuation rule resulted in substantially less income to the employee than would result under the general valuation rule for charter flights, the employer's allowable deduction, according to the IRS's litigating position, was substantially less than its cost.
Thus, the mismatch of income inclusion versus deductible expense previously enjoyed by taxpayers using SIFL
to value personal use may be a thing of the past.
In virtually every instance involving the use of corporate jets, this working condition fringe safe harbor for security-related travel reduces the valuation of personal trips on the corporate jet from 400 percent of the SIFL
rates to 200 percent.
In general, the value of personal flights taxable to employees using SIFL
does not correspond with the employer's actual costs of providing the flights.
14) The SIFL
rate is multiplied by an "aircraft multiple" based on an airplane's weight and whether the employee is classified as a control employee, or a non-control employee, and a terminal charge is added.