FAVR - Fixed and Variable Rate Plan

How to cut costs on vehicle mileage and expenses for your company - in the USA

FAVR for your BUSINESS Depreciation and 2010-51 Standard Auto Costs MILEAGE LOG THE AUTHOR
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Depreciation of a Vehicle in the FAVR plan

The IRS has determined that for automobiles that a person uses for business a payer may not provide a FAVR allowance for an automobile for which an employee has:..

  1. Claimed depreciation using a method other than straight-line for it's estimated useful life
  2. Claimed a §179 deduction
  3. Claimed the additional first year depreciation allowance under or example §168(k) or §168(n), or
  4. Used ACRS under former §168 or MACRS under current §168

If an employee uses actual costs for an owned automobile that has been covered with a FAVR allowance, the employee must use straight-line depreciation for the automobiles remaining estimated useful life
(Subject to the applicable depreciation deduction limitations under §280F).

The IRS has written a huge amount of information for details of this plan and some of the details might affect your business, so I suggest that if you are going to employ this plan take the time to read the details. They are available on Link text IRS bulletin 2010-51.

See .04 Depreciation on the IRS sheet 2010-51 on this subject for more info on the depreciation aspect of the plan.

Section 6 covers the FAVR plan and it has 8 sections:

  1. .01 In general

  2. .02 Computing a FAVR allowance.

  3. .03 FAVR allowance in lieu of fixed and variable costs

  4. .04 Depreciation (More than is on this page)

  5. .05 FAVR allowance limitations

  6. .06 Employee Reporting

  7. .07 Payer record keeping and reporting

  8. .08 Failure to meet section 6 requirements

It still will be a cost saving method if it all works out.