Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

Section 61.—Gross Income Defined

26 CFR 1.61–21: Taxation of fringe benefits.

Fringe benefits, aircraft valuation for- mula. For purposes of section 1.61–21(g) of the Income Tax Regulations, relating to the rules for valuing non-commercial flights on employer-provided aircraft, the Standard Industry Fare Level (SIFL) cents-per-mile rates and terminal charges in effect for the second half of 2000 are set forth.

Rev. Rul. 2000–40

For purposes of the taxation of fringe benefits under section 61 of the Internal Revenue Code, section 1.61–21(g) of the Income Tax Regulations provides a rule for valuing noncommercial flights on employer-provided aircraft. Section 1.61–21(g)(5) provides an aircraft valuation formula to determine the value of such flights. The value of a flight is determined under the base aircraft valuation formula (also known as the Standard Industry Fare Level formula or SIFL) by

multiplying the SIFL cents-per-mile rates applicable for the period during which the flight was taken by the appropriate aircraft multiple provided in section 1.61–21(g)(7) and then adding the applicable terminal charge. The SIFL cents-permile rates in the formula and the terminal charge are calculated by the Department of Transportation and are reviewed semiannually.

The following chart sets forth the terminal charges and SIFL mileage rates:

Period During Which Terminal SIFL Mileage the Flight Is Taken Charge Rates

7/1/00 - 12/31/00 $34.57 Up to 500 miles = $.1891 per mile

501-1500 miles = $.1442 per mile

Over 1500 miles = $.1386 per mile

DRAFTING INFORMATION

The principle author of this revenue ruling is Kathleen Edmondson of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this revenue ruling, contact Ms. Edmondson on (202) 622-6040 (not a tollfree call).

Section 871.—Tax on Nonresident Alien Individuals

26 CFR 1.871–8: Taxation of nonresident alien individuals engaged in U.S. business or treated as having effectively connected income.

What are the procedures to be followed to obtain a withholding certificate under section 1445 for the reduction of withholding tax under section 1445 on the disposition of U.S. real property interests by foreign persons? See Rev. Proc. 2000–35, page 211.

Section 882.—Tax on Income of Foreign Corporations Connected With United States Business

26CFR 1.882–2: Income of foreign corporation treated as effectively connected with U.S. business.

What are the procedures to be followed to obtain a withholding certificate under section 1445 for the reduction of withholding tax under section 1445 on the disposition of U.S. real property interests by foreign persons? See Rev. Proc. 2000–35, page 211.

Section 897.—Disposition of Investment in United States Real Property

26 CFR 1.897–1: Taxation of foreign investment in United States real property interests, definition of terms.

What are the procedures to be followed to obtain a withholding certificate under section 1445 for the reduction of withholding tax under section 1445 on the disposition of U.S. real property interests by foreign persons? See Rev. Proc. 2000–35, page 211.

August 28, 2000 208 2000–35 I.R.B.