IRS PUBLISHES 1995 AUTOMOBILE DEPRECIATION LIMITS, INCOME INCLUSION AMOUNTS.
Rev. Proc. 95-9; 1995-1 C.B. 498
- Institutional AuthorsInternal Revenue Service
- Cross-Reference
Part III
- Code Sections
- Subject Area/Tax Topics
- Index Termsluxury autos, depreciation limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 94-11070
- Tax Analysts Electronic Citation94 TNT 247-12
Rev. Proc. 95-9
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 1995 and the amounts to be included in income for automobiles first leased during calendar year 1995. Each table reflects the automobile price inflation adjustments required by section 280F(d)(7) of the Internal Revenue Code.
SECTION 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.
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 1995 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 1995. 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, Rev. Proc 93-35, 1993-2 C.B. 472, and Rev. Proc 94-53, 1994-32 I.R.B. 18, to determine inclusion amounts for automobiles first leased before January 1, 1995.
SECTION 4. APPLICATION
01. A taxpayer placing an automobile in service for the first time during calendar year 1995 is limited to the depreciation deduction shown in Table 1 of section 4.02(2). A taxpayer first leasing an automobile in calendar year 1995 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 136.6 for October 1994. The October 1994 index exceeded the October 1987 index by 21.4. The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 1995 is 18.58 percent (21.4/115.2 x 100%). This adjustment is applicable to all automobiles that are first placed in service in calendar year 1995. The dollar limitations in section 280F(a) must therefore be multiplied by a factor of 0.1858, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for 1995.
(2) AMOUNT OF THE LIMITATION. For automobiles placed in service in calendar year 1995, 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 1995
Tax Year Amount
________ ______
1st Tax Year $3,060
2nd Tax Year $4,900
3rd Tax Year $2,950
Each Succeeding Year $1,775
03. INCLUSIONS IN INCOME OF LESSEES OF AUTOMOBILES.
The inclusion amounts for automobiles first leased in calendar year 1995 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.
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1995
_____________________________________________________________________
Fair Market Value Tax Year During Lease
of Automobile _________________________________________
1st 2nd 3rd 4th 5th and
Over Not Over Later
_____________________________________________________________________
$15,500 $15,800 4 8 11 13 14
15,800 16,100 7 15 21 25 28
16,100 16,400 10 22 31 37 43
16,400 16,700 13 28 42 50 56
16,700 17,000 16 35 52 62 71
17,000 17,500 20 45 65 78 89
17,500 18,000 26 56 82 98 113
18,000 18,500 31 67 99 119 136
18,500 19,000 36 79 116 139 159
19,000 19,500 41 90 133 159 184
19,500 20,000 46 102 150 179 207
20,000 20,500 52 113 167 200 230
20,500 21,000 57 124 184 220 254
21,000 21,500 62 136 201 240 277
21,500 22,000 67 147 218 261 301
22,000 23,000 75 164 244 291 336
23,000 24,000 86 187 277 332 383
24,000 25,000 96 210 311 373 429
25,000 26,000 106 233 345 413 477
26,000 27,000 117 256 378 454 524
27,000 28,000 127 279 412 495 570
28,000 29,000 138 301 447 535 617
29,000 30,000 148 324 481 575 665
30,000 31,000 159 347 514 616 711
31,000 32,000 169 370 548 657 758
32,000 33,000 179 393 582 698 804
33,000 34,000 190 416 616 738 851
34,000 35,000 200 439 650 778 899
35,000 36,000 211 461 684 819 946
36,000 37,000 221 484 718 860 992
37,000 38,000 232 507 751 901 1,039
38,000 39,000 242 530 785 942 1,086
39,000 40,000 253 552 820 982 1,133
40,000 41,000 263 576 853 1,022 1,180
41,000 42,000 273 599 887 1,063 1,227
42,000 43,000 284 621 921 1,104 1,274
43,000 44,000 294 644 955 1,145 1,320
44,000 45,000 305 667 989 1,185 1,367
45,000 46,000 315 690 1,022 1,226 1,415
46,000 47,000 326 712 1,057 1,266 1,462
47,000 48,000 336 735 1,091 1,307 1,508
48,000 49,000 346 759 1,124 1,347 1,556
49,000 50,000 357 781 1,158 1,388 1,603
50,000 51,000 367 804 1,192 1,429 1,649
51,000 52,000 378 827 1,226 1,469 1,696
52,000 53,000 388 850 1,260 1,510 1,743
53,000 54,000 399 872 1,294 1,551 1,790
54,000 55,000 409 895 1,328 1,591 1,837
55,000 56,000 419 919 1,361 1,632 1,884
56,000 57,000 430 941 1,395 1,673 1,931
57,000 58,000 440 964 1,429 1,714 1,977
58,000 59,000 451 987 1,463 1,754 2,024
59,000 60,000 461 1,010 1,497 1,794 2,072
60,000 62,000 477 1,044 1,548 1,855 2,142
62,000 64,000 498 1,089 1,616 1,937 2,235
64,000 66,000 519 1,135 1,683 2,018 2,330
66,000 68,000 539 1,181 1,751 2,100 2,423
68,000 70,000 560 1,227 1,819 2,180 2,517
70,000 72,000 581 1,272 1,887 2,262 2,611
72,000 74,000 602 1,318 1,955 2,343 2,704
74,000 76,000 623 1,364 2,022 2,424 2,799
76,000 78,000 644 1,409 2,090 2,506 2,892
78,000 80,000 665 1,455 2,158 2,586 2,986
80,000 85,000 701 1,535 2,277 2,729 3,150
85,000 90,000 753 1,650 2,445 2,932 3,385
90,000 95,000 806 1,763 2,616 3,135 3,619
95,000 100,000 858 1,878 2,784 3,339 3,853
100,000 110,000 936 2,049 3,039 3,643 4,206
110,000 120,000 1,040 2,278 3,377 4,050 4,674
120,000 130,000 1,145 2,506 3,716 4,456 5,144
130,000 140,000 1,249 2,735 4,055 4,862 5,613
140,000 150,000 1,353 2,963 4,394 5,269 6,082
150,000 160,000 1,458 3,191 4,733 5,675 6,551
160,000 170,000 1,562 3,420 5,072 6,081 7,020
170,000 180,000 1,666 3,649 5,410 6,488 7,489
180,000 190,000 1,771 3,877 5,749 6,894 7,958
190,000 200,000 1,875 4,105 6,089 7,300 8,427
200,000 210,000 1,979 4,334 6,427 7,706 8,897
210,000 220,000 2,084 4,562 6,766 8,113 9,365
220,000 230,000 2,188 4,791 7,105 8,518 9,835
230,000 240,000 2,292 5,019 7,444 8,925 10,304
240,000 250,000 2,397 5,247 7,783 9,332 10,772
_____________________________________________________________________
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for automobiles (other than leased automobiles) that are first placed in service during calendar year 1995 and to leased automobiles that are first leased during calendar year 1995.
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
- Cross-Reference
Part III
- Code Sections
- Subject Area/Tax Topics
- Index Termsluxury autos, depreciation limit
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 94-11070
- Tax Analysts Electronic Citation94 TNT 247-12