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STANDARD RATES FOR THE JET SET

March 22, 2004

Most of us are familiar with the use of mileage rates to value personal use of company cars. Not so many of us have to worry about valuing personal trips on company aircraft. For those who do, the IRS publishes "SIFL" (Standard Industry Fare Level) rates for valuing personal use of company aircraft.

The IRS just released the SIFL rates for the first half of 2004 (Rev. Rul. 2004-36). The rates have two parts: a "Terminal Charge" that applies to each trip, no matter the length, and a mileage charge. Of course, it has to be more complicated: the mileage charge is multiplied by an "aircraft multiple" before it is added to the "terminal charge." If you are a "control employee," you use a different aircraft multiple.

For flights taken January 1, 2004 through June 30, 2004 the terminal charge will be $34.45. For the first 500 miles of a trip, the SIFL rate per mile is $.1884. For the next 1000 miles, the rate is $.1437; for miles after that, the rate is $.1381 per mile.

The aircraft multiples are:

 Maximum                 Aircraft              Aircraft
 certified         multiple for a        multiple for a
 take-off                 control           non-control
 weight of the           employee              employee
 aircraft               (percent)             (percent)
 -------------      -------------           -----------
 6,000 lbs. or less          62.5                  15.6
 6,001-10,000 lbs.          125.0                  23.4
10,001-25,000 lbs.          300.0                  31.3
25,001 lbs. or more         400.0                  31.3

So Joe Executive, CFO, has a 2000 mile flight in the company Boeing to go golfing. As a control employee, his aircraft multiple is 400%. The amount added to the W-2 is as follows:

First 500 miles: 400% x $.1884 x 500 =  $376.80
Next 1000 miles: 400% x $.1437 x 1000 = $574.80
Last 500 miles: 400% x $.1381 x 500 =   $276.20
                                        _______ 
                                      $1,227.80
+ Terminal Charge:			  34.35
                                       ________
Total amount added to Joe's W-2:       $1262.15

If his wife accompanies him, another $1,262.15 is added.

If he takes the Saratoga next time (maximum takeoff weight 3,600 lbs) his aircraft multiple will only be 62.5%, and his W-2 add-back will be only $226.19.

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