FMV for YE auto calculation
I could use some help on Fair Market Value and YE personal usage taxation.
I have been with this organization for 3 years as the Payroll Manager and during the Year End process I calculate the taxable benefit of personal usage on leased vehicles. I follow Publication 15-B for direction on how to apply the FMV calculation.
Here are the details.
The employee took delivery of the new car on 6/24/13, the car was a 2013 Buick. The value of the car was $27,903. For the 2013 YE process we determined the annual lease value to be $7,250.00 based upon the value in Pub 15-B. We ask our employees to fill out a summary around November 1 that records the beginning and ending mileage from Nov 1 of the previous year to Oct 31 of the current year and to provide total business and personal miles driven. From those details we can determine the taxable benefit of the car.
For the 2017 YE process the employee still has the same car. They are questioning why the FMV of the car has not been re-determined for the Nov 1 2016 to Oct 31 2017 year. I provided the employee with the 4-year lease term rule which states the FMV will stay the same for the period that begins with the first date you use this rule for the automobile and end on December 31 of the fourth full calendar year follow that date. The employee then rebuttled with the Special Accounting Rule, saying that because of this rule the car should be re-determined for FMV for the Nov 1 2016 to Oct 31, 2017 year.
Can somebody shed some light on if the employee is correct that the FMV of the car should be re-determined for the 2017 year or do they have to wait until next year for the value to be re-determined.