IRS ANNOUNCES LIMITATIONS ON DEPRECIATION DEDUCTIONS FOR AUTOS PLACED IN SERVICE IN 1993.
Rev. Proc. 93-35; 1993-2 C.B. 472
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Index Termsdepreciation
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation93 TNT 185-20
Rev. Proc. 93-35
SECTION 1. PURPOSE
This revenue procedure provides owners and lessees of passenger automobiles with tables detailing the limitations on depreciation deductions for automobiles first placed in service during calendar year 1993 and the amounts to be included in income for automobiles first leased during calendar year 1993. Each table reflects the automobile price inflation adjustments required by section 280F(d)(7) of the Internal Revenue Code
SEC. 2. BACKGROUND
For owners of automobiles, section 280F(a) of the Code imposes dollar limitations on the depreciation deduction for both the year that the automobile is placed in service and each succeeding year. 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 calendar year 1988.
For leased automobiles, section 280F(c) of the Code 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) of the Income Tax Regulations, 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. The table shows inclusion amounts for a range of fair market values for each tax year after the automobile is first leased.
SEC. 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 1993 and continue to apply for each tax year that the automobile remains in service.
02. The table in section 4.03 of this revenue procedure applies to leased automobiles for which the lease term begins in calendar year 1993. Lessees of such automobiles must use this table to determine the inclusion amount for each tax year during which the automobile is leased. See sections 1.280F-5T(d) and 1.280F-5T(e) of the temporary Income Tax Regulations, section 1.280F-7(a) of the regulations, Rev. Proc. 8964, 1989-2 C.B. 783, Rev. Proc. 90-22, 1990-1 C.B. 504, Rev. Proc. 91-30, 1991-1 C.B. 563, and Rev. Proc. 9243, 1992-1 C.B. 873, to determine inclusion amounts for automobiles first leased before January 1, 1993.
SEC. 4. APPLICATION
01. A taxpayer placing an automobile in service for the first time during calendar year 1993 is limited to the depreciation deduction shown in Table 1 of section 4.02(2). A taxpayer first leasing an automobile in calendar year 1993 must use Table 2 in section 4.03 to determine the inclusion amount that is added to gross income. Otherwise, the procedures of section 1.280F-7(a) of the regulations must be followed.
02. Limitations on Depreciation Deductions for Certain Automobiles.
(1) Amount of the Inflation Adjustment. Under section 280F(d)(7)(B)(i) of the Code, 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 128.2 for October 1992. The October 1992 index exceeded the October 1987 index by 13.0. The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 1993 is 11.28 percent (13.0/115.2 x 100%). This adjustment is applicable to all automobiles that are first placed in service in calendar year 1993. The dollar limitations in section 280F(a) must therefore be multiplied by a factor of 0.1128, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for 1993.
(2) Amount of the Limitation. For automobiles placed in service in calendar year 1993, Table 1 contains the dollar amount of the depreciation limitations for each tax year.
DEPRECIATION LIMITATIONS FOR AUTOMOBILES FIRST PLACED IN
SERVICE IN CALENDAR YEAR 1993
Tax Year Amount
________ ______
1st Tax Year $2,860
2nd Tax Year $4,600
3rd Tax Year $2,750
Each Succeeding Year $1,675
_____________________________________________________________________
03. Inclusions in Income of Lessees of Automobiles.
The inclusion amounts for automobiles first leased in calendar year 1993 are calculated under the procedures described in section 1.280F-7(a) of the regulations. Table 2 of this revenue procedure is the applicable table to be used in applying those procedures.
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1993
Fair Market Value Tax Year During Lease
of Automobile ______________________________________________
5th and
Over Not Over 1st 2nd 3rd 4th Later
_____________________________________________________________________
$14,300 $14,600 1 1 2 2 3
14,600 14,900 3 5 7 9 9
14,900 15,200 4 9 13 15 17
15,200 15,500 6 13 18 22 25
15,500 15,800 8 16 24 29 32
15,800 16,100 9 20 30 35 40
16,100 16,400 11 24 35 42 48
16,400 16,700 13 27 41 49 55
16,700 17,000 14 32 46 55 63
17,000 17,500 17 36 54 64 73
17,500 18,000 20 42 63 75 87
18,000 18,500 22 49 72 86 99
18,500 19,000 25 55 82 97 112
19,000 19,500 28 61 91 108 125
19,500 20,000 31 67 100 120 137
20,000 20,500 34 74 109 130 150
20,500 21,000 37 80 118 142 163
21,000 21,500 39 86 128 153 175
21,500 22,000 42 92 138 163 189
22,000 23,000 47 101 151 181 207
23,000 24,000 52 114 170 202 233
24,000 25,000 58 127 187 225 259
25,000 26,000 64 139 206 247 285
26,000 27,000 69 152 224 270 310
27,000 28,000 75 164 243 292 335
28,000 29,000 81 176 262 313 362
29,000 30,000 86 189 280 336 387
30,000 31,000 92 201 299 358 412
31,000 32,000 98 214 317 380 438
32,000 33,000 103 226 336 402 464
33,000 34,000 109 239 354 424 490
34,000 35,000 115 251 373 446 515
35,000 36,000 120 264 391 469 540
36,000 37,000 126 276 410 491 566
37,000 38,000 132 288 429 513 591
38,000 39,000 137 301 447 535 617
39,000 40,000 143 314 465 557 643
40,000 41,000 149 326 484 579 669
41,000 42,000 154 339 502 601 695
42,000 43,000 160 351 521 623 720
43,000 44,000 166 363 539 646 746
44,000 45,000 171 376 558 668 771
45,000 46,000 177 388 577 690 796
46,000 47,000 183 401 594 713 822
47,000 48,000 189 413 613 735 847
48,000 49,000 194 426 631 757 874
49,000 50,000 200 438 650 779 899
50,000 51,000 206 450 669 801 925
51,000 52,000 211 463 687 824 950
52,000 53,000 217 475 706 846 975
53,000 54,000 223 488 724 867 1,002
54,000 55,000 228 501 742 890 1,027
55,000 56,000 234 513 761 912 1,052
56,000 57,000 240 525 780 934 1,078
57,000 58,000 245 538 798 956 1,104
58,000 59,000 251 550 817 978 1,130
59,000 60,000 257 563 835 1,000 1,155
60,000 62,000 265 581 863 1,034 1,194
62,000 64,000 277 606 900 1,078 1,245
64,000 66,000 288 631 937 1,123 1,295
66,000 68,000 299 656 974 1,167 1,347
68,000 70,000 311 681 1,011 1,211 1,398
70,000 72,000 322 706 1,048 1,255 1,450
72,000 74,000 333 731 1,085 1,300 1,500
74,000 76,000 345 756 1,121 1,345 1,551
76,000 78,000 356 781 1,158 1,389 1,603
78,000 80,000 367 806 1,195 1,434 1,654
80,000 85,000 387 849 1,261 1,510 1,744
85,000 90,000 416 911 1,353 1,622 1,871
90,000 95,000 444 974 1,445 1,733 1,999
95,000 100,000 472 1,036 1,538 1,843 2,128
100,000 110,000 515 1,130 1,676 2,010 2,319
110,000 120,000 572 1,254 1,861 2,232 2,575
120,000 130,000 629 1,379 2,046 2,453 2,831
130,000 140,000 685 1,504 2,231 2,674 3,088
140,000 150,000 742 1,628 2,416 2,896 3,344
150,000 160,000 799 1,753 2,600 3,119 3,599
160,000 170,000 856 1,877 2,786 3,340 3,855
170,000 180,000 912 2,002 2,971 3,561 4,112
180,000 190,000 969 2,127 3,155 3,783 4,368
190,000 200,000 1,026 2,251 3,340 4,006 4,623
200,000 210,000 1,083 2,376 3,525 4,227 4,879
210,000 220,000 1,140 2,500 3,710 4,449 5,135
220,000 230,000 1,196 2,625 3,895 4,670 5,392
230,000 240,000 1,253 2,749 4,081 4,892 5,647
240,000 250,000 1,310 2,874 4,265 5,114 5,903
_____________________________________________________________________
SEC. 5. EFFECTIVE DATE
This revenue procedure is effective for automobiles (other than leased automobiles) that are first placed in service during calendar year 1993 and to 1eased automobiles that are first leased during calendar year 1993.
DRAFTING INFORMATION
The principal author of this revenue procedure is Bernard P. Harvey of the Office of Assistant Chief Counsel (Passthroughs and Special Industries). For further information regarding this revenue procedure contact Mr. Harvey on (202) 622-3110 (not a toll-free call).
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Index Termsdepreciation
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation93 TNT 185-20