2014 Depreciation Limits on Luxury Autos: IRS Rev Proc 2014-21

According to 26 U.S. Code § 280F - Limitation on depreciation for luxury automobiles the first year's depreciation expense for a newly procured vehicle should be prorated over the tax year based on the in service date not to exceed the limitations spelled out in IRS Rev Proc 2014-21

For passenger automobiles the 2014 Tax Year Amount is:

1st Tax Year $ 3,160
2nd Tax Year $ 5,100
3rd Tax Year $ 3,050

For trucks and vans the 2014 Tax Year Amount is:

1st Tax Year $ 3,460
2nd Tax Year $ 5,500
3rd Tax Year $ 3,350

This of course is separate and distinct from new vehicle acquisition from a manufacturer that entitles business owners to the provisions of 26 U.S. Code § 179 - Election to expense certain depreciable business assets.

For Lease Inclusions be sure to reference Table 3 of IRS Rev Proc 2014-21.

All I can say about this is that if you are fooled into messing with these tables you will get dinged now that the IRS' new modernized e-file system is fully functional. Not to worry though as these numbers are updated annually to account for inflation.

John R. Dundon, EA [720-234-1177, John@JohnRDundon.com]. John is a lifelong student of the US Tax Code; enrolled with the United States Treasury Department to practice before the IRS (Enrolled Agent # 00085353); under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent; regulated under USC 31 Section 330 & USC 26 Section 7525a.3.A; governed under US Treasury Cir. 230.

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Posted in Amortization, Depreciation, Self Employ, Small Business, Tax Deductible Expenses, Tax Guidance & Preparation

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