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IRS Provides Limits On Depreciation Deductions For Autos.

MAR. 21, 2005

Rev. Proc. 2005-13; 2005-1 C.B. 759

DATED MAR. 21, 2005
DOCUMENT ATTRIBUTES
Citations: Rev. Proc. 2005-13; 2005-1 C.B. 759

Rev. Proc. 2005-13

SECTION 1. PURPOSE

01. This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2005, including special tables of limitations on depreciation deductions for trucks and vans, and for passenger automobiles designed to be propelled primarily by electricity and built by an original equipment manufacturer (electric automobiles); and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2005, including a separate table of inclusion amounts for lessees of trucks and vans, and a separate table for lessees of electric automobiles.

02. The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7).

SECTION 2. BACKGROUND

01. For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. In the case of electric automobiles placed in service after August 5, 1997, and before January 1, 2007, § 280F(a)(1)(C) requires tripling of these limitation amounts. Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI "automobile component" (the "new trucks" component) than that used in the price inflation amount calculation for other passenger automobiles (the "new cars" component), resulting in somewhat higher depreciation deductions for trucks and vans. This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. For purposes of this revenue procedure, the term "trucks and vans" refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis.

02. For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F-7(a), this reduction requires the lessees to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. There is a table for lessees of electric automobiles, a table for lessees of trucks and vans, and a table for all other passenger automobiles. Each table shows inclusion amounts for a range of fair market values for each tax year after the passenger automobile is first leased.

SECTION 3. SCOPE

01. The limitations on depreciation deductions in section 4.02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2005, and continue to apply for each tax year that the passenger automobile remains in service.

02. The tables in section 4.03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2005. Lessees of such passenger automobiles must use these tables to determine the inclusion amount for each tax year during which the passenger automobile is leased. See Rev. Proc. 2002-14, 2002-1 C.B. 450, for passenger automobiles first leased before January 1, 2003, Rev. Proc. 2003-75, 2003-2 C.B. 1018, for passenger automobiles first leased during calendar year 2003, and Rev. Proc. 2004-20, 2004-1 C.B. 642, for passenger automobiles first leased during calendar year 2004.

SECTION 4. APPLICATION

01. In General.

(1) Limitations on Depreciation Deductions for Certain Automobiles. The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2005 are found in Tables 1 through 3 in section 4.02(2) of this revenue procedure. Table 1 of this revenue procedure provides limitations on depreciation deductions for a passenger automobile. Table 2 of this revenue procedure provides limitations on depreciation deductions for a truck or van. Table 3 of this revenue procedure provides limitations on depreciation deductions for an electric automobile.

(2) Inclusions in Income of Lessees of Passenger Automobiles. A taxpayer first leasing a passenger automobile during calendar year 2005 must determine the inclusion amount that is added to gross income using the tables in section 4.03 of this revenue procedure. The inclusion amount is determined using Table 4 in the case of a passenger automobile (other than a truck, van, or electric automobile), Table 5 in the case of a truck or van, and Table 6 in the case of an electric automobile. In addition, the procedures of § 1.280F-7(a) must be followed.

02. Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the Inflation Adjustment. Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. The term "CPI automobile component" is defined in § 280F(d)(7)(B)(ii) as the "automobile component" of the Consumer Price Index for all Urban Consumers published by the Department of Labor (the CPI). The new car component of the CPI was 115.2 for October 1987 and 133.0 for October 2004. The October 2004 index exceeded the October 1987 index by 17.8. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for passenger automobiles (other than trucks and vans) is 15.45 percent (17.8/115.2 x 100%). This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.1545, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks, vans, and electric automobiles) for calendar year 2005. To determine the dollar limitations applicable to an electric automobile first placed in service during calendar year 2005, the dollar limitations in § 280F(a) are tripled in accordance with § 280F(a)(1)(C) and are then multiplied by a factor of 0.1545; the resulting increases, after rounding to the nearest $100, are added to the tripled 1988 limitations to give the depreciation limitations for calendar year 2005. To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2005, the new truck component of the CPI is used instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 143.1 for October 2004. The October 2004 index exceeded the October 1987 index by 30.7. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for trucks and vans is 27.31 percent (30.7/112.4 x 100%). This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.2731, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans.

(2) Amount of the Limitation. For passenger automobiles placed in service by the taxpayer in calendar year 2005, Tables 1 through 3 contain the dollar amount of the depreciation limitation for each tax year. Use Table 1 for passenger automobiles placed in service by the taxpayer in calendar year 2005. Use Table 2 for trucks and vans placed in service by the taxpayer in calendar year 2005. Use Table 3 for electric automobiles placed in service by the taxpayer in calendar year 2005.

                      REV. PROC. 2005-13 TABLE 1

 

 

          DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES

 

      PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005

 

 

              Tax Year                        Amount

 

 

           1st Tax Year                       $2,960

 

           2nd Tax Year                       $4,700

 

           3rd Tax Year                       $2,850

 

           Each Succeeding Year               $1,675

 

 

                      REV. PROC. 2005-13 TABLE 2

 

 

             DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS

 

      PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005

 

 

              Tax Year                        Amount

 

 

           1st Tax Year                       $3,260

 

           2nd Tax Year                       $5,200

 

           3rd Tax Year                       $3,150

 

           Each Succeeding Year               $1,875

 

 

                      REV. PROC. 2005-13 TABLE 3

 

 

           DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES

 

      PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005

 

 

              Tax Year                        Amount

 

 

           1st Tax Year                       $8,880

 

           2nd Tax Year                      $14,200

 

           3rd Tax Year                       $8,450

 

           Each Succeeding Year               $5,125

 

 

03. Inclusions in Income of Lessees of Passenger Automobiles.

The inclusion amounts for passenger automobiles first leased in calendar year 2005 are calculated under the procedures described in § 1.280F-7(a). Lessees of passenger automobiles other than trucks, vans, and electric automobiles should use Table 4 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 5 of this revenue procedure and lessees of electric automobiles should use Table 6 of this revenue procedure.

                      REV. PROC. 2005-13 TABLE 4

 

 

               DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES

 

         (THAT ARE NOT TRUCKS, VANS, OR ELECTRIC AUTOMOBILES)

 

           WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005

 

 

  Fair Market Value

 

    of Passenger

 

     Automobile                   Tax Year During Lease

 

 

   Over      Not Over      1st       2nd      3rd      4th    5th & Later

 

 

 $15,200     $15,500        3         6        9       11         13

 

  15,500      15,800        4         9       13       17         19

 

  15,800      16,100        5        12       18       22         26

 

  16,100      16,400        7        15       22       27         32

 

  16,400      16,700        8        18       27       32         39

 

  16,700      17,000        9        21       32       38         44

 

  17,000      17,500       11        25       38       45         52

 

  17,500      18,000       14        30       45       54         63

 

  18,000      18,500       16        35       52       63         73

 

  18,500      19,000       18        40       60       72         83

 

  19,000      19,500       20        46       67       80         94

 

  19,500      20,000       23        50       75       90        104

 

  20,000      20,500       25        55       82       99        115

 

  20,500      21,000       27        61       89      108        125

 

  21,000      21,500       30        65       97      117        135

 

  21,500      22,000       32        70      105      125        146

 

  22,000      23,000       35        78      116      139        161

 

  23,000      24,000       40        88      131      156        182

 

  24,000      25,000       44        98      146      175        202

 

  25,000      26,000       49       108      161      192        223

 

  26,000      27,000       54       118      175      211        244

 

  27,000      28,000       58       128      191      228        265

 

  28,000      29,000       63       138      205      247        285

 

  29,000      30,000       67       149      220      264        306

 

  30,000      31,000       72       159      234      283        326

 

  31,000      32,000       77       168      250      300        348

 

  32,000      33,000       81       179      265      318        367

 

  33,000      34,000       86       189      279      336        389

 

  34,000      35,000       90       199      295      354        409

 

  35,000      36,000       95       209      309      372        430

 

  36,000      37,000       99       219      325      389        451

 

  37,000      38,000      104       229      339      408        471

 

  38,000      39,000      109       239      354      426        491

 

  39,000      40,000      113       249      370      443        512

 

  40,000      41,000      118       259      384      462        533

 

  41,000      42,000      122       269      400      479        554

 

  42,000      43,000      127       279      414      497        575

 

  43,000      44,000      132       289      429      515        595

 

  44,000      45,000      136       299      444      533        616

 

  45,000      46,000      141       309      459      551        636

 

  46,000      47,000      145       320      473      569        657

 

  47,000      48,000      150       329      489      587        678

 

  48,000      49,000      154       340      504      604        699

 

  49,000      50,000      159       350      518      623        719

 

  50,000      51,000      164       360      533      640        740

 

  51,000      52,000      168       370      548      659        760

 

  52,000      53,000      173       380      563      676        781

 

  53,000      54,000      177       390      578      694        802

 

  54,000      55,000      182       400      593      712        823

 

  55,000      56,000      186       410      609      729        844

 

  56,000      57,000      191       420      623      748        864

 

  57,000      58,000      196       430      638      766        884

 

  58,000      59,000      200       440      653      784        905

 

  59,000      60,000      205       450      668      802        925

 

  60,000      62,000      212       465      691      828        957

 

  62,000      64,000      221       485      721      864        998

 

  64,000      66,000      230       506      750      900      1,039

 

  66,000      68,000      239       526      780      935      1,081

 

  68,000      70,000      248       546      810      971      1,123

 

  70,000      72,000      258       566      839    1,008      1,163

 

  72,000      74,000      267       586      869    1,044      1,204

 

  74,000      76,000      276       606      899    1,079      1,247

 

  76,000      78,000      285       626      930    1,114      1,288

 

  78,000      80,000      294       646      960    1,150      1,329

 

  80,000      85,000      310       682    1,011    1,213      1,402

 

  85,000      90,000      333       732    1,086    1,303      1,504

 

  90,000      95,000      356       782    1,161    1,392      1,608

 

  95,000     100,000      379       832    1,236    1,481      1,712

 

 100,000     110,000      413       908    1,347    1,616      1,867

 

 110,000     120,000      459     1,009    1,496    1,795      2,073

 

 120,000     130,000      505     1,109    1,646    1,974      2,280

 

 130,000     140,000      551     1,210    1,795    2,153      2,486

 

 140,000     150,000      597     1,310    1,945    2,332      2,693

 

 150,000     160,000      642     1,411    2,094    2,511      2,900

 

 160,000     170,000      688     1,512    2,243    2,690      3,106

 

 170,000     180,000      734     1,612    2,392    2,870      3,313

 

 180,000     190,000      780     1,713    2,541    3,048      3,520

 

 190,000     200,000      826     1,813    2,691    3,227      3,727

 

 200,000     210,000      871     1,914    2,840    3,407      3,933

 

 210,000     220,000      917     2,015    2,989    3,585      4,141

 

 220,000     230,000      963     2,115    3,139    3,764      4,347

 

 230,000     240,000    1,009     2,216    3,288    3,943      4,554

 

 240,000     and up     1,055     2,316    3,437    4,123      4,760

 

 

                      Rev. Proc. 2005-13 TABLE 5

 

 

                  DOLLAR AMOUNTS FOR TRUCKS AND VANS

 

           WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005

 

 

  Fair Market Value

 

   of Truck or Van                  Tax Year During Lease

 

 

   Over      Not Over      1st       2nd      3rd      4th    5th & Later

 

 

 $16,700     $17,000        3         6        8       10         11

 

  17,000      17,500        4        10       14       17         20

 

  17,500      18,000        7        15       21       26         30

 

  18,000      18,500        9        20       29       35         40

 

  18,500      19,000       11        25       37       43         51

 

  19,000      19,500       14        30       44       52         61

 

  19,500      20,000       16        35       51       62         71

 

  20,000      20,500       18        40       59       71         81

 

  20,500      21,000       20        45       67       79         92

 

  21,000      21,500       23        50       74       88        103

 

  21,500      22,000       25        55       81       98        113

 

  22,000      23,000       28        63       92      111        129

 

  23,000      24,000       33        73      107      129        149

 

  24,000      25,000       38        83      122      147        169

 

  25,000      26,000       42        93      137      165        190

 

  26,000      27,000       47       103      152      183        210

 

  27,000      28,000       51       113      167      201        231

 

  28,000      29,000       56       123      182      218        253

 

  29,000      30,000       60       133      197      237        272

 

  30,000      31,000       65       143      212      254        294

 

  31,000      32,000       70       153      227      272        314

 

  32,000      33,000       74       163      242      290        335

 

  33,000      34,000       79       173      257      308        355

 

  34,000      35,000       83       184      271      326        376

 

  35,000      36,000       88       193      287      344        397

 

  36,000      37,000       93       203      302      361        418

 

  37,000      38,000       97       214      316      380        438

 

  38,000      39,000      102       223      332      397        459

 

  39,000      40,000      106       234      346      415        480

 

  40,000      41,000      111       244      361      433        500

 

  41,000      42,000      115       254      376      451        521

 

  42,000      43,000      120       264      391      469        542

 

  43,000      44,000      125       274      406      487        562

 

  44,000      45,000      129       284      421      505        583

 

  45,000      46,000      134       294      436      523        603

 

  46,000      47,000      138       304      451      541        624

 

  47,000      48,000      143       314      466      558        645

 

  48,000      49,000      148       324      481      576        666

 

  49,000      50,000      152       334      496      594        687

 

  50,000      51,000      157       344      511      612        707

 

  51,000      52,000      161       355      525      630        728

 

  52,000      53,000      166       364      541      648        748

 

  53,000      54,000      170       375      555      666        769

 

  54,000      55,000      175       385      570      684        789

 

  55,000      56,000      180       394      586      701        811

 

  56,000      57,000      184       405      600      720        830

 

  57,000      58,000      189       415      615      737        852

 

  58,000      59,000      193       425      630      755        873

 

  59,000      60,000      198       435      645      773        893

 

  60,000      62,000      205       450      667      800        924

 

  62,000      64,000      214       470      697      836        966

 

  64,000      66,000      223       490      727      872      1,007

 

  66,000      68,000      232       510      757      908      1,048

 

  68,000      70,000      241       531      786      944      1,089

 

  70,000      72,000      251       550      817      979      1,131

 

  72,000      74,000      260       571      846    1,015      1,172

 

  74,000      76,000      269       591      876    1,051      1,213

 

  76,000      78,000      278       611      906    1,087      1,254

 

  78,000      80,000      287       631      936    1,123      1,296

 

  80,000      85,000      303       666      989    1,185      1,368

 

  85,000      90,000      326       717    1,063    1,274      1,472

 

  90,000      95,000      349       767    1,137    1,365      1,575

 

  95,000     100,000      372       817    1,212    1,454      1,678

 

 100,000     110,000      406       893    1,324    1,588      1,833

 

 110,000     120,000      452       993    1,474    1,767      2,040

 

 120,000     130,000      498     1,094    1,623    1,945      2,247

 

 130,000     140,000      544     1,194    1,772    2,125      2,454

 

 140,000     150,000      590     1,295    1,921    2,304      2,660

 

 150,000     160,000      636     1,395    2,071    2,483      2,867

 

 160,000     170,000      681     1,496    2,220    2,662      3,074

 

 170,000     180,000      727     1,597    2,369    2,841      3,281

 

 180,000     190,000      773     1,697    2,519    3,020      3,487

 

 190,000     200,000      819     1,798    2,668    3,199      3,694

 

 200,000     210,000      865     1,898    2,817    3,379      3,900

 

 210,000     220,000      910     1,999    2,967    3,557      4,107

 

 220,000     230,000      956     2,100    3,115    3,737      4,314

 

 230,000     240,000     1,002    2,200    3,265    3,916      4,520

 

 240,000     and up      1,048    2,301    3,414    4,094      4,728

 

 

                      REV. PROC. 2005-13 TABLE 6

 

 

                DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES

 

           WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005

 

 

  Fair Market Value

 

    of Electric

 

     Automobile                   Tax Year During Lease

 

 

   Over      Not Over      1st       2nd      3rd      4th    5th & Later

 

 

 $45,000     $46,000        5        11       18       21         25

 

  46,000      47,000       10        21       33       39         45

 

  47,000      48,000       14        31       48       57         66

 

  48,000      49,000       19        41       63       75         86

 

  49,000      50,000       23        52       77       93        107

 

  50,000      51,000       28        61       93      111        127

 

  51,000      52,000       33        71      108      129        148

 

  52,000      53,000       37        82      122      147        169

 

  53,000      54,000       42        92      137      164        190

 

  54,000      55,000       46       102      152      183        210

 

  55,000      56,000       51       112      167      200        231

 

  56,000      57,000       55       122      182      218        252

 

  57,000      58,000       60       132      197      236        272

 

  58,000      59,000       65       142      212      254        293

 

  59,000      60,000       69       152      227      272        314

 

  60,000      62,000       76       167      250      298        345

 

  62,000      64,000       85       187      280      334        386

 

  64,000      66,000       94       208      309      370        427

 

  66,000      68,000      104       227      339      406        469

 

  68,000      70,000      113       247      369      442        510

 

  70,000      72,000      122       268      398      478        551

 

  72,000      74,000      131       288      428      514        593

 

  74,000      76,000      140       308      458      550        634

 

  76,000      78,000      149       328      489      585        675

 

  78,000      80,000      159       348      518      621        717

 

  80,000      85,000      175       383      571      683        789

 

  85,000      90,000      197       434      645      773        892

 

  90,000      95,000      220       484      720      863        995

 

  95,000     100,000      243       534      795      952      1,099

 

 100,000     110,000      278       610      906    1,086      1,254

 

 110,000     120,000      323       711    1,055    1,266      1,460

 

 120,000     130,000      369       811    1,205    1,444      1,668

 

 130,000     140,000      415       912    1,354    1,623      1,874

 

 140,000     150,000      461     1,012    1,504    1,802      2,081

 

 150,000     160,000      507     1,113    1,652    1,982      2,287

 

 160,000     170,000      553     1,213    1,802    2,161      2,494

 

 170,000     180,000      598     1,314    1,951    2,340      2,701

 

 180,000     190,000      644     1,415    2,100    2,519      2,908

 

 190,000     200,000      690     1,515    2,250    2,698      3,114

 

 200,000     210,000      736     1,616    2,399    2,877      3,321

 

 210,000     220,000      782     1,716    2,549    3,055      3,528

 

 220,000     230,000      827     1,817    2,698    3,235      3,734

 

 230,000     240,000      873     1,918    2,847    3,413      3,942

 

 240,000     and up       919     2,018    2,997    3,592      4,148

 

 

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by the taxpayer during calendar year 2005, and to leased passenger automobiles that are first leased by the taxpayer during calendar year 2005.

SECTION 6. DRAFTING

 

INFORMATION

 

 

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding the depreciation limitations and lessee inclusion amounts in this revenue procedure, contact Bernard P. Harvey at (202) 622-3110 (not a toll-free call).
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