When a church owns the vehicle driven by the Pastor and the Pastor uses the vehicle for personal use, an amount must be added to his income.  Personal use is any use which is not church business.  Commuting is considered personal use. The Pastor must log his miles and provide the church with a statement showing the business miles driven and the total miles driven.

Calculating Personal Use on an Employer Owned Vehicle

Subtract the pastor’s business miles from his total miles.  This gives you his personal miles.  Divide his personal miles by the total miles.  This gives you the percentage of personal use. Using the Annual Leave Value table below, multiple the percent of personal use by the annual lease value (if the vehicle was not made available for the entire year, multiple by the fraction – the number of days available divided by 365).  Add this amount to the Pastor’s income on his W-2, block 1*.
*If the employer provides the gasoline then add 5½ cents for each personal mile.
*If the employee provides the gasoline then deduct 5½ cents for each business mile.

Annual Lease Value

Generally, you figure the annual lease value of an automobile as follows.

1)  Determine the fair market value (FMV) of the automobile on the first date it is available to any employee for personal use.

2)  Using the following Annual Leave Value Table, read down column 1 until you come to the dollar range within which the FMV of the automobile falls.  Then read across to column 2 to find the annual lease value.

For automobiles with a FMV of more than $59,999, the annual lease value equals
(.25 x the FMV of the automobile) + $500.

For more information refer to IRS Publication 15-B.