IRS ANNOUNCES DEPRECIATION LIMITS FOR CARS FIRST PLACED IN SERVICE IN 1994.
Rev. Proc. 94-53; 1994-2 C.B. 712
- Institutional AuthorsInternal Revenue Service
- Code Sections
- Index Termsluxury autos, depreciation, limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation94 TNT 154-19
Rev. Proc 94-53
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 1994 and the amounts to be included in income for automobiles first leased during calendar year 1994. 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) 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) 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 1994 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 1994. 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), Rev. Proc. 89-64, 1989-2 C.B. 783, Rev. Proc. 90-22, 1990-1 C.B. 504, Rev. Proc. 91-30, 1991-1 C.B. 563, Rev. Proc. 92-43, 1992-1 C.B. 873, and Rev. Proc. 93-35, 1993-2 C.B. 472, to determine inclusion amounts for automobiles first leased before January 1, 1994.
SEC. 4. APPLICATION
01. A taxpayer placing an automobile in service for the first time during calendar year 1994 is limited to the depreciation deduction shown in Table 1 of section 4.02(2). A taxpayer first leasing an automobile in calendar year 1994 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) must be followed.
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 131.9 for October 1993. The October 1993 index exceeded the October 1987 index by 16.7. The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 1994 is 14.50 percent (16.7/115.2 x 100%). This adjustment is applicable to all automobiles that are first placed in service in calendar year 1994. The dollar limitations in section 280F(a) must therefore be multiplied by a factor of 0.1450, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for 1994.
(2) Amount of the Limitation. For automobiles placed in service in calendar year 1994, Table 1 contains the dollar amount of the depreciation limitations for each tax year.
REV. PROC. 94-53 TABLE 1
DEPRECIATION LIMITATIONS FOR AUTOMOBILES
FIRST PLACED IN SERVICE IN CALENDAR YEAR 1994
Tax Year Amount
________ ______
1st Tax Year $2,960
2nd Tax Year $4,700
3rd Tax Year $2,850
Each Succeeding Year $1,675
03. Inclusions in Income of Lessees of Automobiles.
The inclusion amounts for automobiles first leased in calendar year 1994 are calculated under the procedures described in section 1.280F-7(a). Table 2 of this revenue procedure is the applicable table to be used in applying those procedures.
REV. PROC. 94-53 TABLE 2
DOLLAR AMOUNTS FOR AUTOMOBILES WITH A
LEASE TERM BEGINNING IN CALENDAR YEAR 1994
Fair Market Value
of Automobile Tax Year During Lease
_________________________ _____________________________________
5th and
Over Not Over 1st 2nd 3rd 4th Later
___________________________________________________________________
$14,600 $ 14,900 0 1 1 2 2
14,900 15,200 2 5 6 9 11
15,200 15,500 4 9 14 17 20
15,500 15,800 6 14 21 25 30
15,800 16,100 8 19 27 34 39
16,100 16,400 10 24 34 42 49
16,400 16,700 12 28 41 51 58
16,700 17,000 14 33 48 59 68
17,000 17,500 17 39 57 70 81
17,500 18,000 21 47 68 84 97
18,000 18,500 24 55 80 97 113
18,500 19,000 28 62 92 111 129
19,000 19,500 31 70 104 124 145
19,500 20,000 35 78 115 138 161
20,000 20,500 39 85 127 152 176
20,500 21,000 42 93 138 166 193
21,000 21,500 46 101 149 180 208
21,500 22,000 49 109 161 193 225
22,000 23,000 54 121 178 214 248
23,000 24,000 62 136 201 242 280
24,000 25,000 69 151 224 270 312
25,000 26,000 76 167 247 297 344
26,000 27,000 83 182 270 325 376
27,000 28,000 90 198 293 352 408
28,000 29,000 97 213 317 379 440
29,000 30,000 104 229 339 408 471
30,000 31,000 111 244 363 435 503
31,000 32,000 118 260 385 463 535
32,000 33,000 125 276 408 490 567
33,000 34,000 132 291 431 518 599
34,000 35,000 139 307 454 545 631
35,000 36,000 146 322 478 573 662
36,000 37,000 153 338 500 601 694
37,000 38,000 161 353 523 628 726
38,000 39,000 168 368 547 656 757
39,000 40,000 175 384 569 684 790
40,000 41,000 182 399 593 711 822
41,000 42,000 189 415 615 739 854
42,000 43,000 196 431 638 766 886
43,000 44,000 203 446 661 794 918
44,000 45,000 210 462 684 821 950
45,000 46,000 217 477 708 849 981
46,000 47,000 224 493 730 877 1,013
47,000 48,000 231 508 754 904 1,045
48,000 49,000 238 524 776 932 1,077
49,000 50,000 245 539 800 959 1,109
50,000 51,000 252 555 822 987 1,141
51,000 52,000 260 570 845 1,015 1,172
52,000 53,000 267 585 869 1,042 1,204
53,000 54,000 274 601 892 1,069 1,236
54,000 55,000 281 617 914 1,097 1,268
55,000 56,000 288 632 938 1,125 1,299
56,000 57,000 295 648 960 1,153 1,331
57,000 58,000 302 663 984 1,180 1,363
58,000 59,000 309 679 1,006 1,208 1,395
59,000 60,000 316 694 1,030 1,235 1,427
60,000 62,000 327 717 1,065 1,276 1,475
62,000 64,000 341 748 1,111 1,332 1,538
64,000 66,000 355 780 1,156 1,387 1,602
66,000 68,000 369 811 1,202 1,442 1,666
68,000 70,000 383 842 1,248 1,497 1,730
70,000 72,000 397 873 1,294 1,553 1,793
72,000 74,000 412 903 1,341 1,608 1,857
74,000 76,000 426 935 1,386 1,663 1,921
76,000 78,000 440 966 1,432 1,718 1,985
78,000 80,000 454 997 1,478 1,774 2,048
80,000 85,000 479 1,051 1,559 1,870 2,160
85,000 90,000 514 1,129 1,674 2,008 2,319
90,000 95,000 550 1,206 1,789 2,146 2,478
95,000 100,000 585 1,284 1,904 2,284 2,637
100,000 110,000 638 1,400 2,077 2,491 2,876
110,000 120,000 709 1,555 2,307 2,767 3,195
120,000 130,000 779 1,710 2,537 3,043 3,514
130,000 140,000 850 1,865 2,767 3,319 3,833
140,000 150,000 921 2,020 2,997 3,595 4,151
150,000 160,000 992 2,175 3,228 3,870 4,470
160,000 170,000 1,062 2,331 3,457 4,147 4,788
170,000 180,000 1,133 2,486 3,687 4,423 5,107
180,000 190,000 1,204 2,641 3,917 4,699 5,425
190,000 200,000 1,274 2,796 4,148 4,974 5,745
200,000 210,000 1,345 2,951 4,378 5,250 6,063
210,000 220,000 1,416 3,106 4,608 5,527 6,381
220,000 230,000 1,487 3,261 4,838 5,803 6,699
230,000 240,000 1,557 3,416 5,069 6,078 7,019
240,000 250,000 1,628 3,571 5,299 6,354 7,337
SEC. 5. EFFECTIVE DATE
This revenue procedure is effective for automobiles (other than leased automobiles) that are first placed in service during calendar year 1994 and to leased automobiles that are first leased during calendar year 1994.
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 Termsluxury autos, depreciation, limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Electronic Citation94 TNT 154-19