2012 automobile depreciation limits released

BY ALISTAIR M. NEVIUS
March 3, 2012

The IRS on Friday issued the 2012 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F (Rev. Proc. 2012-23).

For passenger automobiles (other than trucks or vans) placed in service during calendar year 2012 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: $11,360 for the first tax year.

For passenger automobiles (other than trucks or vans) placed in service during calendar year 2012 to which bonus depreciation does not apply, the depreciation limit under Sec. 280F(d)(7) is $3,160 for the first tax year. For trucks and vans to which bonus depreciation does not apply, the limit is $3,360 for the first tax year.

Bonus depreciation does not affect the limits after the first year. For passenger automobiles, 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 the limits are $5,300 for the second tax year; $3,150 for the third tax year; and $1,875 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 2012.

Alistair M. Nevius ( anevius@aicpa.org ) is editor-in-chief for tax.

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