Value of Company Vehicle

[Sheila K]

Could someone give me the updated "thinking" on the value of a company vehicle to an employee. Basically we're in the process of making an offer to someone and want to consider the value of the vehicle to the employee as a part of his salary package. I've heard numbers from $6,000 to $8,000 per year..but am not certain if that's current thinking or not. Any help would be appreciated. THANKS

(Posted by Sheila K for Doug Brown)

[Guest Harry O]

There really is no "thinking" on valuing employer-provided autos. It is all in the IRS regulations. See Reg. 1.61-21 for all the info you ever wanted on this subject. The value depends on so many different factors that it is hard to even hazard a guess. But the most important fact is the value of the car you ar making available. Obviously, letting someone have personal use of a Yugo generates a lower tax bill than giving someone the use of a Mercedes!

[Guest ERead]

My best suggestion is to use the internet, and find out what lease rates are for the type of vehicle you will be offering. Also consider annual registrations, maintenance and up-keep. Lets say your leasing a 4x4 Truck to the employee as many Enginering firms do - lease rates could be around $350 a month depending on terms and discounts, plus the registration which varies by State (CA - $500 per year is safe). Annual maintenance can be included in some leasing programs, but other wise may be around an additional $200. The total value - $5,000. If your providing an executive vehicle - figure MORE!

Good luck.