This article originally appeared in the January 19, 2024, edition of Accounting & Compliance Alert, available on Checkpoint.
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For purposes of this procedure, the term “passenger automobiles” includes trucks and vans. (Rev Proc 2024-13)
Depreciation of passenger automobiles.
Code Sec. 280F(a) limits the allowable depreciation deduction that owners of passenger automobiles can take for the year the taxpayer places the passenger automobile in service and for each succeeding year.
Code Sec. 280F(c)(2) requires the lessee of a leased passenger automobile to reduce their allowable depreciation deduction in an amount substantially equivalent to the depreciation deductions limits imposed on owners of passenger automobiles. This reduction is accomplished by requiring the lessee to include in their gross income an amount determined by applying a formula to a dollar amount obtained from a table provided by the IRS.
Depreciation tables.
The procedure contains three tables,
Table 1 provides depreciation limitations for passenger automobiles acquired by the taxpayer after September 27, 2017, and placed in service by the taxpayer during calendar year 2024, to which the Code Sec. 168(k) additional first year depreciation deduction applies.
Table 2 provides depreciation limitations for passenger automobiles placed in service by the taxpayer during calendar year 2024 for which no Code Sec. 168(k) additional first year depreciation deduction applies.
Table 3 provides the dollar amount used by lessees of passenger automobiles with a lease term beginning in 2024 to determine the income inclusion amount for those passenger automobiles. The table provides dollar amounts for a range of fair market values.
Effective date.
The depreciation deduction limits in Tables 1 and 2 apply to passenger automobiles, other than leased passenger automobiles, that are placed in service by the taxpayer in calendar year 2024, and continue to apply for each tax year that the passenger automobile remains in service.
The dollar amounts in Table 3 apply to leased passenger automobiles with a lease term beginning in calendar year 2024, and continue to apply for each tax year during the lease.
For more information on business auto depreciation limits, see Checkpoint’s Federal Tax Coordinator ¶L-10001; For income inclusion amounts for business auto lessees, see Checkpoint’s Federal Tax Coordinator ¶L-10200.
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