The IRS recently released Revenue Procedure 2013-21, which provides the depreciation limitations and lease inclusion amounts for automobiles used in a trade or business that are placed in service during 2013. The limitations and inclusion amounts are updated annually to reflect the latest price inflation adjustments.
The depreciation limitations cap regular depreciation for each year an automobile is used in a trade or business and bonus depreciation for new automobiles placed in service during a tax year. A taxpayer’s total deductions relating to a leased automobile used in a trade or business is reduced by a lease inclusion amount. The purpose of the lease inclusion amount is to equalize the tax effect between depreciating and leasing an automobile used in a trade or business.
The tables used in determining the depreciation limitations and lease inclusion amounts are provided in Revenue Procedure 2013-21.
The depreciation limitations for passenger automobiles (other than trucks and vans) place in service during 2013 are as follows:
- First year - $3,160 ($11,160 if taking Section 168(k) additional first-year depreciation deduction)
- Second year - $5,100
- Third year - $3,050
- Each succeeding year - $1,875
The depreciation limitations for trucks and vans placed in service during 2013 are as follows:
- First year - $3,360 ($11,360 if taking Section 168(k) additional first-year depreciation deduction)
- Second year - $5,400
- Third year - $3,250
- Each succeeding year - $1,975
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