IRS issues new and revised passenger automobile depreciation limits

By Sally P. Schreiber, J.D.

New figures for 2014 reflect the retroactive extension of bonus depreciation.

The IRS revised the amounts of depreciation taxpayers can take for the first year they use a passenger automobile (including a truck or van) for business in 2014 and issued new figures for 2015 (Rev. Proc. 2015-19, amplifying and modifying Rev. Proc. 2014-21). The revised numbers for 2014 were necessary because the Tax Increase Prevention Act of 2014, P.L. 113-295, extended bonus depreciation retroactively to the beginning of 2014. However, the act did not extend bonus depreciation for 2015, so an additional bonus depreciation amount is unavailable for passenger automobiles placed in service in 2015.

Under the retroactive extension, the amount of the first-year depreciation limitation for 2014 for passenger automobiles to which bonus depreciation applies is increased by $8,000. For passenger automobiles (other than trucks or vans) placed in service during calendar year 2014 to which 50% first-year bonus depreciation applies, the depreciation limit under Sec. 280F(d)(7) is $11,160 for the first tax year. Trucks and vans to which bonus depreciation applies have a slightly higher limit: $11,460 for the first tax year.

For 2015, for passenger automobiles (other than trucks or vans) placed in service during that calendar year, the depreciation limit under Sec. 280F(d)(7) is $3,160 for the first tax year. For trucks and vans, the limit is $3,460 for the first tax year.

For passenger automobiles for 2015, the limits are $5,100 for the second tax year; $3,050 for the third tax year; and $1,875 for each successive tax year.

For trucks and vans for 2015, the limits are $5,600 for the second tax year; $3,350 for the third tax year; and $1,975 for each successive tax year.

Sec. 280F(c) limits deductions for the cost of leasing automobiles, expressed as an income inclusion amount according to a formula and tables prescribed under Regs. Sec. 1.280F-7. The revenue procedure provides an updated table of the amounts to be included in income by lessees of passenger automobiles and another for trucks and vans, in both cases with lease terms that begin in calendar year 2015.

By Sally P. Schreiber, J.D., a JofA senior editor.

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