2019 inflation-adjusted vehicle depreciation limits and income inclusions issued

By Sally P. Schreiber, J.D.

The IRS on Tuesday provided the limitations on depreciation deductions for passenger automobiles first placed in service in 2019 and the amounts of income inclusion for lessees of passenger automobiles first leased during 2019 (Rev. Proc. 2019-26). Passenger automobiles include trucks and vans. The amounts in the revenue procedure are inflation-adjusted as required by Sec. 280F(d)(7), using the automobile component of the chained consumer price index for all urban consumers (C-CPI-U). The earlier consumer price index was replaced by the C-CPI-U by the law known as the Tax Cuts and Jobs Act, P.L. 115-97.

For passenger automobiles to which the Sec. 168(k) additional (bonus) first-year depreciation deduction applies and that were acquired before Sept. 28, 2017, and placed in service during calendar year 2019, the depreciation limit under Sec. 280F(d)(7) is $14,900 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year.

For passenger automobiles to which the Sec. 168(k) additional (bonus) first-year depreciation deduction applies and that are acquired after Sept. 27, 2017, and placed in service during calendar year 2019, the depreciation limit under Sec. 280F(d)(7) is $18,100 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding year.

For passenger automobiles for which no Sec. 168(k) additional (bonus) first-year depreciation deduction applies, the depreciation limit under Sec. 280F(d)(7) is $10,100 for the first tax year; $16,100 for the second tax year; $9,700 for the third tax year; and $5,760 for each succeeding 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. Table 4 of Rev. Proc. 2019-26 contains the income inclusion amounts for lessees of passenger automobiles first leased during 2019. It shows income inclusion amounts for a range of fair market values for each tax year after the automobile is first leased.

— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a JofA senior editor.

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