Employer pays for auto lease

[ILLMAS]

I was wondering if mileage deduction would be considered deductible (form 2106) if the employer pays for the TP auto lease? TP owns the car, pays for maintenance, repairs, insurance and fuel cost, the employer just pays for the monthly lease payments, I want to make sure he is not getting two benefits.

Thanks

MAS

[Gail in Virginia]

I would calculate the mileage expense and then treat the lease payment as reimbursement from employer. Depending on the numbers this could result in deduction or possibly even income.

[schirallicpa]

Doesn't there have to be a written plan in place regarding the expenses and reimbursement. Other wise, the TP should have been 1099-d for the auto lease payment

[Lynn EA USTCP in Louisiana]

no, the auto lease payment would have been included in his taxable W2 wages if there is no accountable plan in place.

[OldJack]

I have never found where it says that an accountable plan must be in writing.

[jainen]

>>I want to make sure he is not getting two benefits.<<

I would encourage taxpayer to not try to squeeze out every dollar on this unless he has excellent records. If he deducts mileage allowance for business use then 100% of the lease payment is a taxable fringe. If he only deducts actual (business percentage of non-reimbursed maintenance and operating costs), then personal percentage of the lease is a taxable fringe. In fact, that second part is true in any case so I would guess your client is better off not mentioning the car at all on his tax return.