IRS Provides Limits On Depreciation Deductions For Autos.
Rev. Proc. 2000-18; 2000-1 C.B. 722
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Subject Area/Tax Topics
- Index Termsdepreciationluxury autos, depreciation, limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2000-5558 (5 original pages)
- Tax Analysts Electronic Citation2000 TNT 39-13
Rev. Proc. 2000-18
[Editor's Note: In Announcement 2000-17, March 27, 2000, the IRS made corrections to the following Rev. Proc. 2000-16. Those changes have been incorporated below.]
SECTION 1. PURPOSE
This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service during calendar year 2000, including separate limitations on passenger automobiles designed to be propelled primarily by electricity and built by an original equipment manufacturer (electric automobiles); (2) the amounts to be included in income by lessees of passenger automobiles first leased during calendar year 2000, including separate inclusion amounts for electric automobiles; and (3) the maximum allowable value of employer-provided automobiles first made available to employees for personal use in calendar year 2000 for which the vehicle cents-per-mile valuation rule provided under section 1.61-21(e) of the Income Tax Regulations may be applicable. The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by section 280F(d)(7) of the Internal Revenue Code. The maximum allowable automobile value for applying the vehicle cents-per-mile valuation rule reflects the automobile price inflation adjustment of section 280F(d)(7) as required by section 1.61- 21(e)(1)(iii)(A).
SECTION 2. BACKGROUND
For owners of automobiles, section 280F(a) imposes dollar limitations on the depreciation deduction for the year that the automobile is placed in service and each succeeding year. In the case of electric automobiles placed in service after August 5, 1997, and before January 1, 2005, section 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.
For leased automobiles, section 280F(c) requires a reduction in the deduction allowed to the lessee of the automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of automobiles. Under section 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 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 automobile is first leased.
For automobiles first provided by employers to employees that meet the requirements of section 1.61-21(e)(1), the value to the employee of the use of the automobile may be determined under the vehicle cents-per-mile valuation rule of section 1.61-21(e). Section 1.61-21(e)(1)(iii)(A) provides that for an automobile first made available after 1988 to any employee of the employer for personal use, the value of the use of the automobile may not be determined under the vehicle cents-per-mile valuation rule for a calendar year if the fair market value of the automobile (determined pursuant to section 1.61-21(d)(5)(i) through (iv)) on the first date the automobile is made available to the employee exceeds $12,800 as adjusted by section 280F(d)(7).
SECTION 3. SCOPE AND OBJECTIVE
01. The limitations on depreciation deductions in section 4.02 of this revenue procedure apply to automobiles (other than leased automobiles) that are placed in service in calendar year 2000 and continue to apply for each tax year that the automobile remains in service.
02. The tables in section 4.03 of this revenue procedure apply to leased automobiles for which the lease term begins in calendar year 2000. Lessees of such automobiles must use these tables to determine the inclusion amount for each tax year during which the automobile is leased.
03. See Rev. Proc. 96-25, 1996-1 C.B. 681, for information on determining inclusion amounts for automobiles first leased before January 1, 1997; Rev. Proc. 97-20, 1997-1 C.B. 647, for automobiles first leased during calendar year 1997, including electric automobiles first leased on or after January 1, 1997, and before August 6, 1997; Rev. Proc. 98-24, 1998-1 C.B, 663, for electric automobiles first leased after August 5, 1997, and before January 1, 1998; Rev. Proc. 98-30, 1998-1 C.B. 930, for all automobiles first leased in calendar year 1998; and Rev. Proc. 99-14, 1999-5 I.R.B. 56, for all automobiles first leased in calendar year 1999.
04. The maximum fair market value figure in section 4.04(2) of this revenue procedure applies to employer-provided automobiles first made available to any employee for personal use in calendar year 2000. See Rev. Proc. 97-20, for the maximum fair market value figure for automobiles first made available in calendar year 1997; Rev. Proc. 98-30, for the maximum fair market value figure for automobiles first made available in calendar year 1998; and Rev. Proc. 99-14, for the maximum fair market value figure for automobiles first made available in calendar year 1999.
SECTION 4. APPLICATION
01. A taxpayer placing an automobile in service for the first time during calendar year 2000 is limited to the depreciation deduction shown in Table 1 of section 4.02(2) of this revenue procedure or, in the case of an electric automobile, Table 2 of this revenue procedure. A taxpayer first leasing an automobile in calendar year 2000 must determine the inclusion amount that is added to gross income using Table 3 of section 4.03 of this revenue procedure or, in the case of an electric automobile, Table 4 of this revenue procedure. In addition, the procedures of section 1.280F-7(a) must be followed. An employer providing an automobile for the first time in calendar year 2000 for the personal use of any employee may determine the value of the use of the automobile by using the cents-per-mile valuation rule in section 1.61-21(e) if the fair market value of the automobile does not exceed the amount specified in section 4.04(2) of this revenue procedure. If the fair market value of the automobile exceeds the amount specified in section 4.04(2) of this revenue procedure, the employer may determine the value of the use of the automobile under the general valuation rules of section 1.61-21(b) or under the special valuation rules of section 1.61-21(d) (Automobile lease valuation) or section 1.61-21(f) (Commuting valuation) if the applicable requirements are met.
02. Limitations on Depreciation Deductions for Certain Automobiles.
(1) Amount of the Inflation Adjustment. Under section 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 section 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 138.8 for October 1999. The October 1999 index exceeded the October 1987 index by 23.6. The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2000 is 20.49 percent (23.6/115.2 x 100%). This adjustment is applicable to all automobiles that are first placed in service in calendar year 2000. The dollar limitations in section 280F(a) must therefore be multiplied by a factor of 0.2049, 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 electric automobiles) for calendar year 2000. To determine the dollar limitations applicable to an electric automobile first placed in service during calendar year 2000, the dollar limitations in section 280F(a) are tripled in accordance with section 280F(a)(1)(C) and are then multiplied by a factor of 0.2049; the resulting increases, after rounding to the nearest $100, are added to the tripled 1988 limitations to give the depreciation limitations for calendar year 2000.
(2) Amount of the Limitation. For automobiles (other than electric automobiles) placed in service in calendar year 2000, Table 1 of this revenue procedure contains the dollar amount of the depreciation limitations for each tax year. For electric automobiles placed in service in calendar year 2000, Table 2 of this revenue procedure contains these amounts.
REV. PROC. 2000-18, TABLE 1
DEPRECIATION LIMITATIONS FOR AUTOMOBILES
(OTHER THAN ELECTRIC AUTOMOBILES)
FIRST PLACED IN SERVICE IN CALENDAR YEAR 2000
Tax Year Amount
________ ______
1st Tax Year $3,060
2nd Tax Year $4,900
3rd Tax Year $2,950
Each Succeeding Year $1,775
REV. PROC. 2000-18 TABLE 2
DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES
FIRST PLACED IN SERVICE IN CALENDAR YEAR 2000
Tax Year Amount
________ ______
1st Tax Year $9,280
2nd Tax Year $14,800
3rd Tax Year $8,850
Each Succeeding Year $5,325
03. Inclusions in Income of Lessees of Automobiles.
The inclusion amounts for automobiles first leased in calendar year 2000 are calculated under the procedures described in section 1.280F-7(a). Lessees of automobiles other than electric automobiles should use Table 3 of this revenue procedure in applying these procedures, while lessees of electric automobiles should use Table 4 of this revenue procedure.
REV. PROC. 2000-18, TABLE 3
DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN ELECTRIC AUTOMOBILES)
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2000
Fair Market Value Tax Year During Lease
of Automobile __________________________________________
1st 2nd 3rd 4th 5th and
Over Not Over Later
__________________________________________________________________
$15,500 15,800 3 6 9 10 12
15,800 16,100 5 12 17 20 23
16,100 16,400 8 17 25 30 34
16,400 16,700 10 23 33 40 45
16,700 17,000 13 28 42 49 57
17,000 17,500 16 36 52 62 72
17,500 18,000 20 45 66 78 91
18,000 18,500 25 54 79 95 109
18,500 19,000 29 63 93 111 128
19,000 19,500 33 72 107 127 147
19,500 20,000 37 81 121 143 166
20,000 20,500 41 91 133 160 185
20,500 21,000 45 100 147 176 204
21,000 21,500 50 109 160 193 222
21,500 22,000 54 118 174 209 241
22,000 23,000 60 132 194 234 269
23,000 24,000 68 150 222 266 306
24,000 25,000 77 168 249 298 345
25,000 26,000 85 187 276 331 381
26,000 27,000 93 205 303 364 419
27,000 28,000 102 223 330 396 457
28,000 29,000 110 241 358 429 494
29,000 30,000 119 259 385 461 532
30,000 31,000 127 278 412 493 570
31,000 32,000 135 296 439 527 607
32,000 33,000 144 314 467 558 645
33,000 34,000 152 333 493 591 683
34,000 35,000 160 351 521 623 720
35,000 36,000 169 369 548 656 757
36,000 37,000 177 388 574 689 795
37,000 38,000 185 406 602 721 833
38,000 39,000 194 424 629 754 870
39,000 40,000 202 443 656 786 908
40,000 41,000 210 461 683 819 946
41,000 42,000 219 479 710 852 983
42,000 43,000 227 497 738 884 1,021
43,000 44,000 235 516 765 916 1,058
44,000 45,000 244 534 792 949 1,095
45,000 46,000 252 552 819 982 1,133
46,000 47,000 260 571 846 1,014 1,171
47,000 48,000 269 589 873 1,047 1,208
48,000 49,000 277 607 901 1,079 1,246
49,000 50,000 285 626 927 1,112 1,284
50,000 51,000 294 644 954 1,145 1,321
51,000 52,000 302 662 982 1,177 1,359
52,000 53,000 311 680 1,009 1,210 1,396
53,000 54,000 319 699 1,036 1,242 1,433
54,000 55,000 327 717 1,063 1,275 1,471
55,000 56,000 336 735 1,090 1,308 1,508
56,000 57,000 344 754 1,117 1,340 1,546
57,000 58,000 352 772 1,145 1,372 1,584
58,000 59,000 361 790 1,172 1,405 1,621
59,000 60,000 369 808 1,199 1,438 1,659
60,000 62,000 381 836 1,240 1,486 1,715
62,000 64,000 398 873 1,294 1,551 1,790
64,000 66,000 415 909 1,348 1,617 1,865
66,000 68,000 432 945 1,403 1,681 1,941
68,000 70,000 448 982 1,457 1,747 2,016
70,000 72,000 465 1,019 1,511 1,811 2,092
72,000 74,000 482 1,055 1,566 1,876 2,166
74,000 76,000 498 1,092 1,620 1,942 2,241
76,000 78,000 515 1,129 1,673 2,007 2,317
78,000 80,000 532 1,165 1,728 2,072 2,392
80,000 85,000 561 1,229 1,823 2,186 2,523
85,000 90,000 603 1,320 1,959 2,349 2,711
90,000 95,000 644 1,412 2,095 2,511 2,899
95,000 100,000 686 1,504 2,230 2,674 3,087
100,000 110,000 749 1,641 2,433 2,918 3,369
110,000 120,000 832 1,824 2,705 3,243 3,745
120,000 130,000 916 2,006 2,977 3,569 4,120
130,000 140,000 999 2,190 3,248 3,894 4,496
140,000 150,000 1,083 2,372 3,520 4,219 4,872
150,000 160,000 1,166 2,556 3,790 4,545 5,248
160,000 170,000 1,250 2,738 4,062 4,871 5,623
170,000 180,000 1,333 2,921 4,334 5,196 5,998
180,000 190,000 1,416 3,105 4,605 5,521 6,374
190,000 200,000 1,500 3,287 4,877 5,846 6,750
200,000 210,000 1,583 3,470 5,148 6,172 7,126
210,000 220,000 1,667 3,653 5,419 6,498 7,501
220,000 230,000 1,750 3,836 5,691 6,823 7,877
230,000 240,000 1,834 4,019 5,962 7,148 8,253
240,000 250,000 1,917 4,202 6,233 7,474 8,629
__________________________________________________________________
REV. PROC. 2000-18, TABLE 4
DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2000
Fair Market Value Tax Year During Lease
of Automobile __________________________________________
1st 2nd 3rd 4th 5th and
Over Not Over Later
__________________________________________________________________
$47,000 48,000 7 17 26 32 36
48,000 49,000 14 31 47 57 66
49,000 50,000 20 45 69 82 95
50,000 51,000 27 59 90 107 124
51,000 52,000 33 74 110 133 153
52,000 53,000 39 88 132 157 183
53,000 54,000 46 102 153 183 211
54,000 55,000 52 116 174 209 240
55,000 56,000 59 130 195 234 270
56,000 57,000 65 145 216 259 299
57,000 58,000 72 159 237 284 328
58,000 59,000 78 173 258 310 357
59,000 60,000 85 187 279 335 387
60,000 62,000 95 208 311 373 430
62,000 64,000 107 237 353 423 489
64,000 66,000 120 266 394 474 547
66,000 68,000 133 294 437 524 606
68,000 70,000 146 322 480 574 664
70,000 72,000 159 351 521 625 723
72,000 74,000 172 379 564 675 781
74,000 76,000 185 407 606 727 838
76,000 78,000 198 436 648 777 897
78,000 80,000 211 464 690 828 955
80,000 85,000 234 514 763 916 1,058
85,000 90,000 266 585 869 1,042 1,204
90,000 95,000 298 656 975 1,168 1,350
95,000 100,000 331 727 1,080 1,295 1,495
100,000 110,000 379 834 1,237 1,485 1,714
110,000 120,000 444 975 1,449 1,737 2,006
120,000 130,000 509 1,117 1,660 1,990 2,297
130,000 140,000 574 1,259 1,870 2,243 2,589
140,000 150,000 638 1,402 2,080 2,496 2,881
150,000 160,000 703 1,543 2,292 2,748 3,173
160,000 170,000 768 1,685 2,503 3,000 3,465
170,000 180,000 833 1,827 2,713 3,254 3,756
180,000 190,000 897 1,970 2,923 3,506 4,049
190,000 200,000 962 2,112 3,134 3,759 4,340
200,000 210,000 1,027 2,253 3,346 4,011 4,632
210,000 220,000 1,092 2,395 3,556 4,264 4,924
220,000 230,000 1,156 2,538 3,766 4,517 5,215
230,000 240,000 1,221 2,680 3,977 4,769 5,507
240,000 250,000 1,286 2,821 4,189 5,022 5,798
__________________________________________________________________
04. Maximum Automobile Value for Using the Cents-per-mile Valuation Rule.
(1) Amount of Adjustment. Under section 1.61-21(e)(1)(iii)(A), the limitation on the fair market value of an employer-provided automobile first made available to any employee for personal use after 1988 is to be adjusted in accordance with section 280F(d)(7). Accordingly, the 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. See, section 4.02(1) of this revenue procedure. The new car component of the CPI was 115.2 for October 1987 and 138.8 for October 1999. The October 1999 index exceeded the October 1987 index by 23.6. The Internal Revenue Service has, therefore, determined that the adjustment for 2000 is 20.49 percent (23.6/115.2 x 100%). This adjustment is applicable to all employer-provided automobiles first made available to any employee for personal use in calendar year 2000. The maximum fair market value specified in section 1.61- 21(e)(1)(iii)(A) must therefore be multiplied by a factor of 0.2049, and the resulting increase, after rounding to the nearest $100, is added to $12,800 to give the maximum value for calendar year 2000.
(2) The Maximum Automobile Value. For automobiles first made available in calendar year 2000 to any employee of the employer for personal use, the vehicle cents-per-mile valuation rule may be applicable if the fair market value of the automobile on the date it is first made available does not exceed $15,400.
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to automobiles (other than leased automobiles) that are first placed in service during calendar year 2000, to leased automobiles that are first leased during calendar year 2000, and to employer-provided automobiles first made available to employees for personal use in calendar year 2000.
DRAFTING INFORMATION
The principal author of this revenue procedure is Bernard P. Harvey of the Office of the Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding the depreciation limitations and lessee inclusion amounts in this revenue procedure, contact Mr. Harvey at (202) 622-3110; for further information regarding the maximum automobile value for applying the vehicle cents-per-mile valuation rule, contact Ms. Lynne Camillo of the Office of the Associate Chief Counsel (Employee Benefits and Exempt Organizations) at (202) 622-6040 (not toll-free calls).
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Subject Area/Tax Topics
- Index Termsdepreciationluxury autos, depreciation, limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 2000-5558 (5 original pages)
- Tax Analysts Electronic Citation2000 TNT 39-13