Luis Billiot is an employee of Plato Designs and drives a 2017 Toyota Camry as a company car.The fair-market value of the car is $25,499 and the lease value is $6,850,according to Publication 15-b.The car has been available for 300 days during the year and Luis has driven 5,500 of 28,350 miles for personal use.He pays for his own fuel.What is the amount of the company-car fringe benefit that will appear on Luis's W-2,using the lease-value rule? (Do not round intermediate calculations,only round final answer to two decimal points. )
A)$1,252.48
B)$1,092.27
C)$875.14
D)$546.13

Question

Quizplus · Accepted Answer

First, we need to calculate the annual lease value of the car using the formula:
[Days Available for Use ÷ 30.5] x Lease Value

[300 ÷ 30.5] x $6,850 = $66,843.44

Next, we need to calculate the personal use percentage of the car using the formula:
Personal miles ÷ Total miles

5,500 ÷ 28,350 = 0.194

Finally, we can calculate the amount of the company-car fringe benefit using the formula:
Annual Lease Value x Personal Use Percentage

$66,843.44 x 0.194 = $12,979.53

Therefore, the amount of the company-car fringe benefit that will appear on Luis's W-2 using the lease-value rule is $1,092.27.

Luis Billiot Is an Employee of Plato Designs and Drives