Lakiesha is an employee who drives a 2017 Buick Verano as a company car. The fair-market value of the car is $28,545. She has been given the choice to have her fringe benefit reported on her W-2 either using the lease-value rule or the cents-per mile rule. According to Publication 15-b, the lease value is $7,750. She has driven 4,500 miles for personal use and 31,250 miles in total during the year. The car has been available for use on 200 days during the year. Lakiesha's employer pays for all fuel. What method and valuation will yield the lowest fringe-benefit amount for Lakiesha? (Do not round intermediate calculations, only round final answer to two decimal points.)

Question

Quizplus · Accepted Answer

The lease-value rule will yield the lowest fringe-benefit amount for Lakiesha because the lease value is lower than the cents-per-mile rate. The lease value is $7,750, and the cents-per-mile rate is $0.27 per mile. Lakiesha drove 4,500 miles for personal use, so the fringe-benefit amount under the cents-per-mile rule would be $4,500 x $0.27 = $1,215. The fringe-benefit amount under the lease-value rule is $7,750 x 200 days / 365 days = $4,252.19.

Lakiesha Is an Employee Who Drives a 2017 Buick Verano