1. What is Right of Use Value?

The Right of Use Value is a calculation used in California to determine the taxable value of an employee's personal use of a company vehicle. It represents the portion of the vehicle's annual lease value that corresponds to personal use.

2. How Does the Calculator Work?

The calculator uses the Right of Use formula:

Where:

• Annual Lease Value — The IRS-determined annual lease value of the vehicle (USD)
• Usage Percentage — The percentage of personal use (0-100%)

Explanation: The equation calculates the taxable portion of vehicle use by multiplying the full annual lease value by the percentage of personal use.

3. Importance of Right of Use Calculation

Details: Accurate calculation is crucial for California employers to properly report taxable fringe benefits and comply with state tax regulations for company-provided vehicles.

4. Using the Calculator

Tips: Enter the vehicle's annual lease value in USD and the percentage of personal use (0-100%). Both values must be valid (lease value > 0, percentage between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: How is Annual Lease Value determined?
A: The IRS publishes annual lease value tables based on the vehicle's fair market value when first made available to employees.

Q2: What counts as personal use?
A: Any use not strictly for business purposes, including commuting, personal errands, or non-business trips.

Q3: How is usage percentage calculated?
A: Typically by dividing personal miles by total miles driven during the year, or through detailed mileage logs.

Q4: Are there alternative calculation methods?
A: Yes, California also allows the cents-per-mile method or commuting value method in certain circumstances.

Q5: When is this calculation required?
A: Whenever an employee has personal use of a company-provided vehicle that isn't strictly for business purposes.