How the SIFL valuation method works
Under IRC § 61, employees must include the value of personal flights on employer-provided aircraft in their gross income, as this constitutes a fringe benefit. The regulations provide two methods for valuing these flights: the flight’s fair market charter cost or a formula-based method known as the Standard Industry Fare Level (SIFL) method.
The SIFL valuation formula, detailed in Reg. § 1.61-21(g), calculates the value of a flight by multiplying the distance traveled by a cents-per-mile rate, which is then multiplied by an aircraft weight multiple. A terminal charge is added to this amount.
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