Rev. Rul. 2021-19: Fringe benefit aircraft valuations, second half of 2021

IRS guidance determining the value of noncommercial flights on employer-provided aircraft for the second half of 2021

Fringe benefit aircraft valuations, second half of 2021

IRS guidance—Rev. Rul. 2021-19—provides information for use in determining the value of noncommercial flights on employer-provided aircraft for the second half of 2021.

Rev. Rul. 2021-19 appears in the Internal Revenue Bulletin 2021-42 [PDF 2.8 MB] dated Monday, October 18, 2021.

Measures specifically related to COVID-19 relief

As explained by Rev. Rul. 2021-19, because of the effect of the coronavirus (COVID-19) pandemic, airline industry capacity (as measured by airline seat miles) was reduced faster than airline industry expenses were reduced. The standard industry fare level (SIFL) rate generally is determined as airline industry expenses divided by airline seat miles. Because airline seat miles were reduced faster than airline industry expenses, the SIFL rate for the six-month period beginning January 1, 2021, increased substantially.

Moreover, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (March 2020) directed the Treasury Department to allot up to $25 billion for domestic carriers to cover payroll expenses via grants and promissory notes—the Payroll Support Program (PSP). These PSP grants and PSP promissory notes offset airline industry expenses.

Accordingly, the Department of Transportation provided two alternatives for incorporating differing levels of the PSP into the SIFL rate calculations—both to account for the PSP in the rate calculations and to mitigate the impact of the COVID-19 pandemic on the SIFL rate.

  • One calculation adjusts the SIFL rates to account for PSP grants.
  • The other calculation adjusts the SIFL rates to account for both the PSP grants and PSP promissory notes.

Accordingly, unlike prior-year revenue rulings providing fringe benefit aircraft valuations for the second half of a year, Rev. Rul. 2021-19 contains three SIFL rates:

  • The unadjusted SIFL rate
  • The SIFL rate adjusted for PSP grants
  • The SIFL rate adjusted for PSP grants and promissory notes

Taxpayers may use any of the three rates in determining the value on noncommercial flights of employer-provided aircraft under Reg. section 1.61-21(g).

Period during which the flight is taken

Terminal charge

Standard industry fare level (SIFL) mileage rates

July 1, 2021 – December 31, 2021

  • $81.43
  • Up to 500 miles = $.4455 per mile
  • 501 - 1500 miles = $.3396 per mile
  • Over 1500 miles = $.3265 per mile

SIFL rate adjusted for PSP grants

 

 

July 1, 2021 – December 31, 2021

  • $43.54
  • Up to 500 miles = $.2382 per mile
  • 501-1500 miles = $.1816 per mile
  • Over 1500 miles = $.1746 per mile

SIFL rate adjusted for PSP grants and promissory notes

 

 

  • July 1, 2021 – December 31, 2021

$30.69

  • Up to 500 miles = $.1679 per mile
  • 501-1500 miles = $.1280 per mile
  • Over 1500 miles = $.1231 per mile

 

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