Standard Industry Fare Level (SIFL) Calculator
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Section 274(c) International Travel SIFL Calculator.
Internal Revenue Code Section 274(c) provides that in the case of any individual who travels outside the United States away from home in pursuit of a trade or business or an investment activity, no deduction shall be allowed for the non-business portion of the trip and special SIFL income imputation rules apply for employer provided flights that have non-business days. These special rules do apply if any travel outside the United States does not exceed one week, or the portion of the time of travel outside the United States which is not attributable to the pursuit of the taxpayer’s trade or business or investment activity is less than 25 percent of the total time on such travel. For purposes of determining whether a trip outside the United States exceeds one week, the day in which travel outside the United States begins shall not be considered, but the day in which such travel ends shall be considered. In counting days for purposes of 25 percent test, travel days to and from the U.S. are considered business days. Treas. Reg. § 1.274-4(d)(2). Moreover, any day that the taxpayer’s presence is required for business reasons at the foreign location is considered a business day. Weekends and holidays are also generally counted as business days if the days arise between business days. If Section 274(c) applies, the SIFL imputed income amount for any employer provided flights on the trip is determined by dividing the total number of personal days outside the U.S. by the total number of foreign travel days and multiplying that amount by the SIFL Amount determined as if the entire trip was a personal trip. See Treas. Reg. § 1.61-21(g)(4)(iv). It should be noted that SIFL imputed income is only required where the flight is provided by an employer or other service recipient; if the aircraft is owned by the individual in lieu of SIFL income imputation, the rule disallows some or all of the expenses associated with the flight. Treas. Reg. § 1.274-4(a) (expense disallowance rule does not apply to an employer provided flight.). Lastly, these special rules only apply if the primary purpose of the trip was business; if the primary purpose of the trip was personal, then SIFL income is imputed under the regular rules.
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SIFL Calculator for Multi-leg Mixed Purpose (personal and non-personal) Trips.
Regulations under Section 1.61-21(g) contain special rules when an employee combines, in one trip, personal and business flights on an employer-provided aircraft. Different calculations apply if the primary purpose of the trip is business or personal. See Regulation § 1.61-21(g). The regulations provide if an employee combines, in one trip, personal and business flights on an employer-provided aircraft and the employee's trip is primarily for the employer's business (see § 1.162-2(b)(2)), the employee must include in income the excess of the value of all the flights that comprise the trip over the value of the flights that would have been taken had there been no personal flights but only business flights. By contrast, if an employee combines, in one trip, personal and business flights on an employer-provided aircraft and the employee's trip is primarily personal (see § 1.162-2(b)(2)), the amount includible in the employee's income is the value of the personal flights that would have been taken had there been no business flights but only personal flights. Please note that for purposes of the calculator, if the primary purpose of the trip is personal, the final leg of any trip can be labeled as personal or business; the SIFL imputation will be the same in either instance.
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Regulatory Requirements to Use Statute Miles; Different Methods to Compute
*There are different ways to compute distances between airports, including statute miles, nautical miles and kilometers. Statute miles are the primary measurement used for calculating SIFL amounts under Treasury Regulation Section 1.61-21(g). Miles between airports can be calculated using AircraftTaxSolution's Distance Calculator. There are two Trigonometric methods that can be used to calculate statute miles: Vincenty's formula and Haversine formula. The IRS has not provided guidance on this other than stating that statute miles are to be used for purposes of computing any SIFL income imputation amounts. The haversine formula determines the great-circle distance between two points on a sphere given their longitudes and latitudes. Vincenty's formula calculates geodesic distances between a pair of latitude and longitude points on the earth’s surface, using an accurate ellipsoidal model of the earth. Both formula's produce the straight line distance between two GPS points or the "as the crow flies" distance (ignoring mountains). Vincenty's formula is believed to be slightly more accurate.
We believe we have one of the more extensive airport GPS databases in our Distance Calculator. If you find that an airport is not in our list, please email us at support@aircrafttaxsolutions.com so we can add.
Learn more about the IRS' SIFL rules and regulations on our SIFL information page.
** AircraftTaxSolutions.com does not provide tax, legal or accounting advice. These materials have been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Standard Industry Fare Level or SIFL
SIFL Basics
Internal Revenue Code Section 61(a)(1) provides that, except as otherwise provided in subtitle A of the Internal Revenue Code of 1986, gross income includes compensation for services, including fees, commissions, fringe benefits, and similar items. Examples of fringe benefits include: an employer-provided automobile, a flight on an employer-provided aircraft, an employer-provided free or discounted commercial airline flight, an employer-provided vacation, an employer-provided discount on property or services, an employer-provided membership in a country club or other social club, and an employer-provided ticket to an entertainment or sporting event. Hence, if an employer permits an officer, employee or other service provider to use the employer's aircraft for a personal flight (and the flight crew, including pilots, is provided), the value of that flight must be included in the individual's gross income for the applicable tax year (to the extent that there is no reimbursement). The regulations under Internal Revenue Code Section 61 provide that these income imputation rules apply to all service providers, even if not common law employees. See Treas. Reg. § 1.61-21(a)(4)(ii) ("The person to whom a fringe benefit is taxable need not be an employee of the provider of the fringe benefit, but may be, for example, a partner, director, or an independent contractor.").
The U.S. Department of Transportation publishes SIFL rates for each six-month period (January 1 - June 30 and July 1 - December 31). These rates are used to determine the imputed tax value of non-business or personal travel aboard employer-provided aircraft under Internal Revenue Service Regulation Section 1.61-21(g). The SIFL amount is determined on a per-flight, per-person basis and generally is reported for tax purposes to the responsible employee or other person on IRS Form W-2 (employees), Form 1099 (independent contractors) or Schedule K-1 (partners) each taxable year. The value of a flight determined under the SIFL formula involves multiplying (1) the SIFL cents-per-mile rates applicable for the 6 month period during which the flight was taken by (2) the appropriate aircraft multiple provided in Treasury Regulation Section 1.61-21(g)(7) and (3) the miles (statute not nautical) between airports and (4) then adding the applicable terminal charge. If you need to determine the statute miles between 2 airports, this can be calculated using our distance calculator. Note that a statute mile is 5,280 feet in length whereas a nautical mile is 6,076.11549 feet in length. If your aircraft logs reflect nautical miles, you will need to convert them to statute miles to compute the SIFL amount for a flight using those records. The examples in the IRS regulations use the distance between airports suggesting that an employer use the miles between airports and not the actual miles flown in computing the SIFL amount for a flight. See Treas. Reg. § 1.61-21(g)(3)(iv), Examples 1 and 2.
The SIFL valuation rule may be used to value international as well as domestic flights. Under the SIFL valuation rules, the SIFL value is determined separately for each flight. Thus, a round-trip is comprised of at least two flights. For example, an employee who takes a personal trip on an employer-provided aircraft from New York City to Denver, then Denver to Los Angeles, and finally Los Angeles to New York City has taken three flights and must apply the SIFL aircraft valuation formula separately to each flight. If a landing is necessitated by weather conditions, by an emergency, for purposes of refueling or obtaining other services relating to the aircraft or for any other purpose unrelated to the personal purposes of the employee whose flight is being valued, that landing is an intermediate stop. Additional mileage attributable to an intermediate stop is not considered when determining the distance of an employee's flight. The SIFL valuation rules may not be used to value a flight on any commercial aircraft on which air transportation is sold to the public on a per-seat basis (commercial airlines). The SIFL valuation rule may be used for flights on owned, chartered, leased and fractionally owned aircraft. The SIFL valuation rule only applies on employer provided flights; in the case of aircraft owned by a person (either directly or through a wholly owned entity (LLC, trust, etc...)), any personal use is not a fringe benefit and instead all deductions are simply disallowed for the personal use.
Who is a SIFL Control Employee?
For this purpose, a SIFL "control employee" of a non-government employer is any employee - (A) Who is a Board- or shareholder-appointed, confirmed, or elected officer of the employer, limited to the lesser of - (1) One percent of all employees (increased to the next highest integer, if not an integer) or (2) Ten employees; (B) Who is among the top one percent most highly-paid employees of the employer (increased to the next highest integer, if not an integer) limited to a maximum of 50; (C) Who owns a five-percent or greater equity, capital, or profits interest in the employer; or (D) Who is a director of the employer. Any employee who is a family member of a control employee is also treated as a control employee. For more details on the definition of a SIFL control employee, see Treasury Regulation § 1.61-21(g). Further, any employee who is a family member of a control employee is also a control employee. In general, an employee who is not a 5% owner nor a director and whose compensation is less than $50,000 will not be treated as a control employee. An employee who was a control employee of the employer at any time after reaching age 55, or within three years of separation from the service of the employer, is a control employee with respect to flights taken after separation from the service of the employer.
Each Flight Leg Must Be Tracked and Evaluated Separately
Each flight leg where a passenger boards and deplanes must be separately determined under the SIFL rules, although intermediate stops to refuel, for weather issues or other emergencies are ignored. Treas. Reg. § 1.61-21(g)(3). If an employee combines, in one trip, personal and business flights on an employer-provided aircraft and the trip is primarily for the employer's business, the imputed SIFL income is the excess of the SIFL value of all the flights that comprise the trip over the SIFL value of the flights that would have been taken had there been no personal flights but only business flights. For example, assume that an employee flies on an employer-provided aircraft from Chicago, Illinois, to Miami, Florida, for the employer's business and then from Miami, the employee flies on the employer-provided aircraft to Orlando, Florida, for personal purposes and then flies back to Chicago. If the primary purpose of the trip is for the employer's business, the amount includible in income is the excess of the value of the three flights (Chicago to Miami, Miami to Orlando, and Orlando to Chicago), over the value of the flights that would have been taken had there been no personal flights but only business flights (Chicago to Miami and Miami to Chicago). If an employee combines, in one trip, personal and business flights on an employer-provided aircraft and the employee's trip is primarily personal, the SIFL amount includible in the employee's income is the SIFL value of the personal flights that would have been taken had there been no business flights but only personal flights. For example, assume that an employee flies on an employer-provided aircraft from San Francisco, California, to Los Angeles, California, for the employer's business and that from Los Angeles the employee flies on an employer-provided aircraft to Palm Springs, California, primarily for personal reasons and then flies back to San Francisco. Assume further that the primary purpose of the trip is personal. The amount includible in the employee's income is the value of personal flights that would have been taken had there been no business flights but only personal flights (San Francisco to Palm Springs and Palm Springs to San Francisco). The SIFL Calculator below includes options to account for mixed purpose trips.
Special rule where 50% of seats are occupied by Business Passengers.
There is a special rule that is applicable if at least 50% of the regular passenger seating capacity on a flight is occupied by business passengers. In that case, there is no SIFL charge for employees (but not directors or independent contractors) and their spouses and children traveling for personal purposes. Treas. Reg. § 1.61-21(g)(12). In the case of other passengers (that is passengers other than an employee, spouse or children) traveling for personal purposes, SIFL income is still imputed, but using the non-control multiple. Treas. Reg. § 1.61-21(g)(12)(B)(1). This special rule applies only if the seating capacity rule is met both at the time the individual whose flight is being valued boards the aircraft and at the time the individual deplanes. Consequently, if there are stops where passengers board and deplane, the changing composition of the passengers must be considered. When determining the regular passenger seating capacity of an aircraft, any seat occupied by a member of the flight crew (whether or not such individual is an employee of the employer providing the aircraft) shall not be counted, unless the purpose of the flight by such individual is not primarily to serve as a member of the flight crew.