2015 Luxury Vehicle Depreciation Limits and Lease Inclusion Amounts Announced.

(Parker Tax Publishing February 24, 2015)

The IRS issued the 2015 luxury vehicle depreciation limitations and the income inclusion amounts for leased vehicles. Rev. Proc. 2015-19.

Background

Under Code Sec. 280F(a), depreciation deductions allowable for passenger automobiles, trucks, and vans are limited to a maximum dollar amount each tax year. This limitation is known as the luxury automobile limitation. The amounts allowable are adjusted each year by an inflation adjustment.

Code Sec. 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile, truck, or van. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of such vehicles. This reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Each table (one for passenger automobiles and one for trucks and vans) shows inclusion amounts for a range of fair market values for each tax year after the vehicle is first leased.

2015 Depreciation Limitations

The depreciation limitations for passenger automobiles placed in service in calendar year 2015 are:

1st Tax Year - $3,160

2nd Tax Year - $5,100

3rd Tax Year - $3,050

Each Succeeding Year - $1,875.

The depreciation limitations for trucks and vans placed in service in calendar year 2015 are:

1st Tax Year - $3,460

2nd Tax Year - $5,600

3rd Tax Year - $3,350

Each Succeeding Year - $1,975

For a discussion of the luxury auto limitations, see Parker Tax ¶94,920. For a discussion of the lease inclusion rules, see Parker Tax ¶94,915. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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