Limitation on Luxury Automobile Depreciation

The IRS just issued the 2013 depreciation limitations for automobiles and trucks. You can see the full release here. The 2013 limits for passenger automobiles are the same as 2012 while the truck limits have increased.

Limitation on Luxury 2

IRS rules limit the amount of depreciation that may be deducted annually on a passenger automobile used for business. This depreciation limit may be found in automobile depreciation limitation tables published by the IRS annually in Publication 463:

Pick-up trucks, SUVs and vans built on a truck chassis with a gross vehicle weight rating of less than 6,000 pounds use a different set of limitations. In 2012 the truck limits in the first year were $3,360 and $11,260 with bonus depreciation. Second year was $5,200, third year was $3,150 and all other years were $1,875. In 2013, these limits have increased by $100 in each year. If bonus depreciation is not elected, then you must use the lower limitation in the first year and the same limits for all subsequent years.

The above limitations all assume a 100% business use of the vehicle. If the vehicle is used more than 50%, but less than 100% then the amount must be reduced proportionally based on the percentage of business use. For example, if a car was used 80% of the time for business then all limits would be multiplied by .80 to calculate the appropriate limitation.

A program like Bassets eDepreciation will automatically calculate these limitations for you and ensure accurate compliance. Additionally we will research the annual tax law changes and confirm that the most current auto limitations are properly applied.

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