[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.46-11]

[Page 290-291]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.46-11  Commuter highway vehicles.

    (a) In general. Section 46(c)(6) provides that the applicable 
percentage to determine qualified investment under section 46(c)(1) for 
a qualifying commuter highway vehicle is 100 percent. A qualifying 
commuter highway vehicle is a vehicle (defined in paragraph (b) of this 
section)--
    (1) Which is acquired by the taxpayer on or after November 9, 1978,
    (2) Which is placed in service by the taxpayer before January 1, 
1986, and
    (3) With respect to which the taxpayer makes an election under 
paragraph (g) of this section.
    (b) Definition of commuter highway vehicle. A commuter highway 
vehicle is a highway vehicle that meets the following requirements:
    (1) The vehicle is section 38 property in the hands of the taxpayer. 
The rule of section 48(d), allowing a lessor to elect to treat the 
lessee of new section 38 property as having acquired the property, 
applies to commuter highway vehicles. If the vehicle is leased and that

election is made, the lessee is treated as the taxpayer under this 
section. However, if that election is not made. the lessor, and not the 
lessee, is treated as the taxpayer under this section.
    (2) The vehicle must meet the seating capacity requirement of 
paragraph (c) of this section; and
    (3) The taxpayer reasonably expects to meet the commuter use 
requirement of paragraph (d) of this section for at least the first 36 
months after the vehicle is placed in service.
    (c) Seating capacity. A commuter highway vehicle must have a seating 
capacity of a least 8 adults in addition to the driver's seat.
    (d) Commuter use requirement. A vehicle meets the commuter use 
requirement only if at least 80 percent of the miles the vehicle is 
driven are for trips to transport the taxpayer's employees between their 
residences and their places of employment. A trip for this purpose 
includes driving the vehicle before or after employees are in the 
vehicle, so long as the mileage driven is necessary either to pick up or 
drop off passengers or to park the vehicle in its regular parking space. 
A trip does not include miles driven solely for maintenance or to refuel 
the vehicle. A trip is not considered to transport the taxpayer's 
employees between their residences and their places of employment unless 
at least one-half the seating capacity (defined in paragraph (c) of this 
section) is used to seat employees of the taxpayer. In no event is the 
driver counted as an employee of the taxpayer.
    (e) Definition of employee. An employee in this section is the same 
as in section 3121 (d) (definition of employee for withholding 
purposes).
    (f) Transportation between employee's residence and place of 
employment. An

[[Page 291]]

employee is transported between that employee's residence and place of 
employment even if that place of employment is not the same as any of 
the other employees transported, and even if picked up or dropped off at 
some central point between that residence and place of employment. An 
employee is not transported between that employee's residence and place 
of employment if the transportation is of the type for which a deduction 
would be allowed under Sec. 1.162-2 were the employee providing it, such 
as the transportation from one work site to another after beginning work 
for the day.
    (g) Election. A taxpayer must elect to have the vehicle treated as a 
qualifying commuter highway vehicle on the return for the taxable year 
in which the vehicle is placed in service. The election may be made only 
if the vehicle actually meets the commuter use requirement under 
paragraph (d) of this section for that taxable year. It must be made on 
or before the due date (including extensions) of that return. The 
election is effective as of that due date.

[T.D. 8035, 50 FR 29370, July 19, 1985]