Under this rule, you determine the value of a vehicle you provide to an employee for commuting use by multiplying each one-way commute (that is, from home to work or from work to home) by $1.50. If more than one employee commutes in the vehicle, this value applies to each employee. This amount must be included in the employee's wages or reimbursed by the employee.

You can use the commuting rule if all the following requirements are met.

1. You provide the vehicle to an employee for use in your trade or business and, for bona fide noncompensatory business reasons, you require the employee to commute in the vehicle. You will be treated as if you had met this requirement if the vehicle is generally used each workday to carry at least three employees to and from work in an employer-sponsored commuting pool.
2. You establish a written policy under which you do not allow the employee to use the vehicle for personal purposes, other than for commuting or de minimis personal use (such as a stop for a personal errand on the way between a business delivery and the employee's home). Personal use of a vehicle is all use that is not for your trade or business.
3. The employee does not use the vehicle for personal purposes, other than commuting and de minimis personal use.
4. If this vehicle is an automobile (any 4-wheeled vehicle, such as a car, pickup truck, or van), the employee who uses it for commuting is not a control employee (see below).

Vehicle. For this rule, a vehicle is any motorized wheeled vehicle, including an automobile, manufactured primarily for use on public streets, roads, and highways.

Control employee. A control employee for 2002 is generally any of the following employees.

1. A board or shareholder-appointed, confirmed, or elected officer whose pay is $80,000 or more.
2. A director.
3. An employee whose pay is $160,000 or more.
4. An employee who owns a 1% or more equity, capital, or profits interest in your business.
5. A government employee whose compensation is equal to or exceeds Federal Government Executive Level V ($121,600 for 2002).
6. An elected official.

Highly compensated employee alternative. Instead of using the preceding definition, you can choose to define a control employee as any highly compensated employee. A highly compensated employee for 2002 is an employee who meets either of the following tests.

1. The employee was a 5% owner at any time during the year or the preceding year.
2. The employee received more than $90,000 in pay for the preceding year.

You can choose to ignore test (2) if the employee was not also in the top 20% of employees when ranked by pay for the preceding year.

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