The IRS has issued guidance (Rev. Proc. 2015-19) providing the depreciation limits for passenger automobiles placed in service in 2015 and adjusting the limits for 2014 to account for the retroactive reinstatement of bonus depreciation.
Section 280F limits depreciation deductions for passenger cars, trucks and vans, and these limits are adjusted for inflation every year. Taxpayers who lease automobiles must also reduce their deductions by an amount equivalent to the limit on depreciation deductions.
The original limits for automobiles placed in service in 2014 did not include the 50% first-year deduction allowed by bonus depreciation because Congress did not provide bonus depreciation for 2014 until December.
The increased depreciation limits (including bonus) for cars placed in service in calendar year 2014 are the following:
- First year: $11,160
- Second year: $5,100
- Third year: $3,050
- Each succeeding year: $1,875
The increased depreciation limits (including bonus) for trucks and vans placed in service in calendar year 2014 are the following:
- First year: $11,460
- Second year: $5,500
- Third year: $3,350
- Each succeeding year: $1,975
The depreciation limits for cars placed in service in 2015 are the following:
- First year: $3,160
- Second year: $5,100
- Third year: $3,050
- Each succeeding year: $1,875
The depreciation limits for trucks and vans placed in service in 2015 are the following:
- First year: $3,460
- Second year: $5,600
- Third year: $3,350
- Each succeeding year: $1,975
The depreciation limits for automobiles placed in service in 2015 could change if bonus depreciation is again extended retroactively for 2015. The revenue procedure also adjusts the tables for determining the limit on deductions for leases of automobiles placed in service in 2014 and 2015 to account for bonus depreciation and inflation adjustment, respectively. The tables are generally based on the fair market value of the automobiles.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.