Aircraft Personal Use: SIFL Rates 2012
This article provides the “ingredients” used in calculating Standard Industry Fare Level (SIFL) charges for personal non-entertainment (PNE) use of aircraft.
For the uninitiated, the SIFL calculation is used to impute income (compensation) to the executive using the plane for a narrow class of non-business, but non-leisure related activities. PNE use can include, for example, the use of the plane to attend a family funeral. The expenses attributable to these flights are generally deductible so long as the executive recognizes the SIFL phantom income.
The most updated SIFL rates for flights taken between 7/1/12 -12/31/12 are:
- 0 to 500 miles = $.2569 per mile
- 501-1,500 miles = $.1959 per mile
- Over 1,500 miles = $.1884 per mile
These charges are calculated “marginally” like income tax rates, that is, you calculate the SIFL mileage charge for each stratum and then add them together. Example: 1,000-mile flight will require calculating 500 miles x $0.2569, plus 500 miles x $0.1959.
This figure is then multiplied by an “aircraft multiple” that depends on two additional factors, first, the Gross Takeoff Weight (GTOW) of the plane, and second, whether the individual generating the SIFL charge is a “control” versus a “non-control” employee. In essence, the larger the plane the larger the multiplier, since SIFL is a “special valuation rule” designed to capture the theoretical value of a first class ticket aboard that type of plane. Also, control employees generate more SIFL income than non-control employees, in theory an adjustment that attributes more income to owners, directors and officers than to other employees. In some cases this reduces the overall bill (a non-control employee multiplier for a small airplane is as low as 15.6%), and in others greatly expands it (a control employee flying a heavy jet multiplies the miles by 4). Call me for the exact figures and some things to look out for.
Top off this figure with a “terminal charge”, which is updated twice per year. The terminal charge for the second half of 2012 it is $46.97 per SIFL-qualified flight.