Internal Revenue Bulletin:  2005-12 

March 21, 2005 

Rev. Proc. 2005-13


SECTION 1. PURPOSE

01. This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2005, including special tables of limitations on depreciation deductions for trucks and vans, and for passenger automobiles designed to be propelled primarily by electricity and built by an original equipment manufacturer (electric automobiles); and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2005, including a separate table of inclusion amounts for lessees of trucks and vans, and a separate table for lessees of electric automobiles.

02. The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7).

SECTION 2. BACKGROUND

01. For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year that the passenger automobile is placed in service by the taxpayer and each succeeding year. In the case of electric automobiles placed in service after August 5, 1997, and before January 1, 2007, § 280F(a)(1)(C) requires tripling of these limitation amounts. Section 280F(d)(7) requires the amounts allowable as depreciation deductions to be increased by a price inflation adjustment amount for passenger automobiles placed in service after 1988. The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. This change reflects the higher rate of price inflation that trucks and vans have been subject to since 1988. For purposes of this revenue procedure, the term “trucks and vans” refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis.

02. For leased passenger automobiles, § 280F(c) requires a reduction in the deduction allowed to the lessee of the passenger automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F-7(a), this reduction requires the lessees to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. There is a table for lessees of electric automobiles, a table for lessees of trucks and vans, and a table for all other passenger automobiles. Each table shows inclusion amounts for a range of fair market values for each tax year after the passenger automobile is first leased.

SECTION 3. SCOPE

01. The limitations on depreciation deductions in section 4.02(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2005, and continue to apply for each tax year that the passenger automobile remains in service.

02. The tables in section 4.03 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2005. Lessees of such passenger automobiles must use these tables to determine the inclusion amount for each tax year during which the passenger automobile is leased. See Rev. Proc. 2002-14, 2002-1 C.B. 450, for passenger automobiles first leased before January 1, 2003, Rev. Proc. 2003-75, 2003-2 C.B. 1018, for passenger automobiles first leased during calendar year 2003, and Rev. Proc. 2004-20, 2004-1 C.B. 642, for passenger automobiles first leased during calendar year 2004.

SECTION 4. APPLICATION

01. In General.

(1) Limitations on Depreciation Deductions for Certain Automobiles. The limitations on depreciation deductions for passenger automobiles placed in service by the taxpayer for the first time during calendar year 2005 are found in Tables 1 through 3 in section 4.02(2) of this revenue procedure. Table 1 of this revenue procedure provides limitations on depreciation deductions for a passenger automobile. Table 2 of this revenue procedure provides limitations on depreciation deductions for a truck or van. Table 3 of this revenue procedure provides limitations on depreciation deductions for an electric automobile.

(2) Inclusions in Income of Lessees of Passenger Automobiles. A taxpayer first leasing a passenger automobile during calendar year 2005 must determine the inclusion amount that is added to gross income using the tables in section 4.03 of this revenue procedure. The inclusion amount is determined using Table 4 in the case of a passenger automobile (other than a truck, van, or electric automobile), Table 5 in the case of a truck or van, and Table 6 in the case of an electric automobile. In addition, the procedures of § 1.280F-7(a) must be followed.

02. Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the Inflation Adjustment. Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. The term “CPI automobile component” is defined in § 280F(d)(7)(B)(ii) as the “automobile component” of the Consumer Price Index for all Urban Consumers published by the Department of Labor (the CPI). The new car component of the CPI was 115.2 for October 1987 and 133.0 for October 2004. The October 2004 index exceeded the October 1987 index by 17.8. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for passenger automobiles (other than trucks and vans) is 15.45 percent (17.8/115.2 x 100%). This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.1545, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks, vans, and electric automobiles) for calendar year 2005. To determine the dollar limitations applicable to an electric automobile first placed in service during calendar year 2005, the dollar limitations in § 280F(a) are tripled in accordance with § 280F(a)(1)(C) and are then multiplied by a factor of 0.1545; the resulting increases, after rounding to the nearest $100, are added to the tripled 1988 limitations to give the depreciation limitations for calendar year 2005. To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2005, the new truck component of the CPI is used instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 143.1 for October 2004. The October 2004 index exceeded the October 1987 index by 30.7. The Service has, therefore, determined that the automobile price inflation adjustment for 2005 for trucks and vans is 27.31 percent (30.7/112.4 x 100%). This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2005. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.2731, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to trucks and vans.

(2) Amount of the Limitation. For passenger automobiles placed in service by the taxpayer in calendar year 2005, Tables 1 through 3 contain the dollar amount of the depreciation limitation for each tax year. Use Table 1 for passenger automobiles placed in service by the taxpayer in calendar year 2005. Use Table 2 for trucks and vans placed in service by the taxpayer in calendar year 2005. Use Table 3 for electric automobiles placed in service by the taxpayer in calendar year 2005.

REV. PROC. 2005-13 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $2,960
2nd Tax Year $4,700
3rd Tax Year $2,850
Each Succeeding Year $1,675
REV. PROC. 2005-13 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $3,260
2nd Tax Year $5,200
3rd Tax Year $3,150
Each Succeeding Year $1,875
REV. PROC. 2005-13 TABLE 3
DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES PLACED IN SERVICE BY THE TAXPAYER DURING CALENDAR YEAR 2005
Tax Year Amount
1st Tax Year $8,880
2nd Tax Year $14,200
3rd Tax Year $8,450
Each Succeeding Year $5,125

03. Inclusions in Income of Lessees of Passenger Automobiles.

The inclusion amounts for passenger automobiles first leased in calendar year 2005 are calculated under the procedures described in § 1.280F-7(a). Lessees of passenger automobiles other than trucks, vans, and electric automobiles should use Table 4 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 5 of this revenue procedure and lessees of electric automobiles should use Table 6 of this revenue procedure.

REV. PROC. 2005-13 TABLE 4
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS, VANS, OR ELECTRIC AUTOMOBILES) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & Later
$15,200 $15,500 3 6 9 11 13
15,500 15,800 4 9 13 17 19
15,800 16,100 5 12 18 22 26
16,100 16,400 7 15 22 27 32
16,400 16,700 8 18 27 32 39
16,700 17,000 9 21 32 38 44
17,000 17,500 11 25 38 45 52
17,500 18,000 14 30 45 54 63
18,000 18,500 16 35 52 63 73
18,500 19,000 18 40 60 72 83
19,000 19,500 20 46 67 80 94
19,500 20,000 23 50 75 90 104
20,000 20,500 25 55 82 99 115
20,500 21,000 27 61 89 108 125
21,000 21,500 30 65 97 117 135
21,500 22,000 32 70 105 125 146
22,000 23,000 35 78 116 139 161
23,000 24,000 40 88 131 156 182
24,000 25,000 44 98 146 175 202
25,000 26,000 49 108 161 192 223
26,000 27,000 54 118 175 211 244
27,000 28,000 58 128 191 228 265
28,000 29,000 63 138 205 247 285
29,000 30,000 67 149 220 264 306
30,000 31,000 72 159 234 283 326
31,000 32,000 77 168 250 300 348
32,000 33,000 81 179 265 318 367
33,000 34,000 86 189 279 336 389
34,000 35,000 90 199 295 354 409
35,000 36,000 95 209 309 372 430
36,000 37,000 99 219 325 389 451
37,000 38,000 104 229 339 408 471
38,000 39,000 109 239 354 426 491
39,000 40,000 113 249 370 443 512
40,000 41,000 118 259 384 462 533
41,000 42,000 122 269 400 479 554
42,000 43,000 127 279 414 497 575
43,000 44,000 132 289 429 515 595
44,000 45,000 136 299 444 533 616
45,000 46,000 141 309 459 551 636
46,000 47,000 145 320 473 569 657
47,000 48,000 150 329 489 587 678
48,000 49,000 154 340 504 604 699
49,000 50,000 159 350 518 623 719
50,000 51,000 164 360 533 640 740
51,000 52,000 168 370 548 659 760
52,000 53,000 173 380 563 676 781
53,000 54,000 177 390 578 694 802
54,000 55,000 182 400 593 712 823
55,000 56,000 186 410 609 729 844
56,000 57,000 191 420 623 748 864
57,000 58,000 196 430 638 766 884
58,000 59,000 200 440 653 784 905
59,000 60,000 205 450 668 802 925
60,000 62,000 212 465 691 828 957
62,000 64,000 221 485 721 864 998
64,000 66,000 230 506 750 900 1,039
66,000 68,000 239 526 780 935 1,081
68,000 70,000 248 546 810 971 1,123
70,000 72,000 258 566 839 1,008 1,163
72,000 74,000 267 586 869 1,044 1,204
74,000 76,000 276 606 899 1,079 1,247
76,000 78,000 285 626 930 1,114 1,288
78,000 80,000 294 646 960 1,150 1,329
80,000 85,000 310 682 1,011 1,213 1,402
85,000 90,000 333 732 1,086 1,303 1,504
90,000 95,000 356 782 1,161 1,392 1,608
95,000 100,000 379 832 1,236 1,481 1,712
100,000 110,000 413 908 1,347 1,616 1,867
110,000 120,000 459 1,009 1,496 1,795 2,073
120,000 130,000 505 1,109 1,646 1,974 2,280
130,000 140,000 551 1,210 1,795 2,153 2,486
140,000 150,000 597 1,310 1,945 2,332 2,693
150,000 160,000 642 1,411 2,094 2,511 2,900
160,000 170,000 688 1,512 2,243 2,690 3,106
170,000 180,000 734 1,612 2,392 2,870 3,313
180,000 190,000 780 1,713 2,541 3,048 3,520
190,000 200,000 826 1,813 2,691 3,227 3,727
200,000 210,000 871 1,914 2,840 3,407 3,933
210,000 220,000 917 2,015 2,989 3,585 4,141
220,000 230,000 963 2,115 3,139 3,764 4,347
230,000 240,000 1,009 2,216 3,288 3,943 4,554
240,000 and up 1,055 2,316 3,437 4,123 4,760
REV. PROC. 2005-13 TABLE 5
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Truck or Van Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th and Later
$16,700 $17,000 3 6 8 10 11
17,000 17,500 4 10 14 17 20
17,500 18,000 7 15 21 26 30
18,000 18,500 9 20 29 35 40
18,500 19,000 11 25 37 43 51
19,000 19,500 14 30 44 52 61
19,500 20,000 16 35 51 62 71
20,000 20,500 18 40 59 71 81
20,500 21,000 20 45 67 79 92
21,000 21,500 23 50 74 88 103
21,500 22,000 25 55 81 98 113
22,000 23,000 28 63 92 111 129
23,000 24,000 33 73 107 129 149
24,000 25,000 38 83 122 147 169
25,000 26,000 42 93 137 165 190
26,000 27,000 47 103 152 183 210
27,000 28,000 51 113 167 201 231
28,000 29,000 56 123 182 218 253
29,000 30,000 60 133 197 237 272
30,000 31,000 65 143 212 254 294
31,000 32,000 70 153 227 272 314
32,000 33,000 74 163 242 290 335
33,000 34,000 79 173 257 308 355
34,000 35,000 83 184 271 326 376
35,000 36,000 88 193 287 344 397
36,000 37,000 93 203 302 361 418
37,000 38,000 97 214 316 380 438
38,000 39,000 102 223 332 397 459
39,000 40,000 106 234 346 415 480
40,000 41,000 111 244 361 433 500
41,000 42,000 115 254 376 451 521
42,000 43,000 120 264 391 469 542
43,000 44,000 125 274 406 487 562
44,000 45,000 129 284 421 505 583
45,000 46,000 134 294 436 523 603
46,000 47,000 138 304 451 541 624
47,000 48,000 143 314 466 558 645
48,000 49,000 148 324 481 576 666
49,000 50,000 152 334 496 594 687
50,000 51,000 157 344 511 612 707
51,000 52,000 161 355 525 630 728
52,000 53,000 166 364 541 648 748
53,000 54,000 170 375 555 666 769
54,000 55,000 175 385 570 684 789
55,000 56,000 180 394 586 701 811
56,000 57,000 184 405 600 720 830
57,000 58,000 189 415 615 737 852
58,000 59,000 193 425 630 755 873
59,000 60,000 198 435 645 773 893
60,000 62,000 205 450 667 800 924
62,000 64,000 214 470 697 836 966
64,000 66,000 223 490 727 872 1,007
66,000 68,000 232 510 757 908 1,048
68,000 70,000 241 531 786 944 1,089
70,000 72,000 251 550 817 979 1,131
72,000 74,000 260 571 846 1,015 1,172
74,000 76,000 269 591 876 1,051 1,213
76,000 78,000 278 611 906 1,087 1,254
78,000 80,000 287 631 936 1,123 1,296
80,000 85,000 303 666 989 1,185 1,368
85,000 90,000 326 717 1,063 1,274 1,472
90,000 95,000 349 767 1,137 1,365 1,575
95,000 100,000 372 817 1,212 1,454 1,678
100,000 110,000 406 893 1,324 1,588 1,833
110,000 120,000 452 993 1,474 1,767 2,040
120,000 130,000 498 1,094 1,623 1,945 2,247
130,000 140,000 544 1,194 1,772 2,125 2,454
140,000 150,000 590 1,295 1,921 2,304 2,660
150,000 160,000 636 1,395 2,071 2,483 2,867
160,000 170,000 681 1,496 2,220 2,662 3,074
170,000 180,000 727 1,597 2,369 2,841 3,281
180,000 190,000 773 1,697 2,519 3,020 3,487
190,000 200,000 819 1,798 2,668 3,199 3,694
200,000 210,000 865 1,898 2,817 3,379 3,900
210,000 220,000 910 1,999 2,967 3,557 4,107
220,000 230,000 956 2,100 3,115 3,737 4,314
230,000 240,000 1,002 2,200 3,265 3,916 4,520
240,000 and up 1,048 2,301 3,414 4,094 4,728
REV. PROC. 2005-13 TABLE 6
DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2005
Fair Market Value of Electric Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th and Later
$45,000 $46,000 5 11 18 21 25
46,000 47,000 10 21 33 39 45
47,000 48,000 14 31 48 57 66
48,000 49,000 19 41 63 75 86
49,000 50,000 23 52 77 93 107
50,000 51,000 28 61 93 111 127
51,000 52,000 33 71 108 129 148
52,000 53,000 37 82 122 147 169
53,000 54,000 42 92 137 164 190
54,000 55,000 46 102 152 183 210
55,000 56,000 51 112 167 200 231
56,000 57,000 55 122 182 218 252
57,000 58,000 60 132 197 236 272
58,000 59,000 65 142 212 254 293
59,000 60,000 69 152 227 272 314
60,000 62,000 76 167 250 298 345
62,000 64,000 85 187 280 334 386
64,000 66,000 94 208 309 370 427
66,000 68,000 104 227 339 406 469
68,000 70,000 113 247 369 442 510
70,000 72,000 122 268 398 478 551
72,000 74,000 131 288 428 514 593
74,000 76,000 140 308 458 550 634
76,000 78,000 149 328 489 585 675
78,000 80,000 159 348 518 621 717
80,000 85,000 175 383 571 683 789
85,000 90,000 197 434 645 773 892
90,000 95,000 220 484 720 863 995
95,000 100,000 243 534 795 952 1,099
100,000 110,000 278 610 906 1,086 1,254
110,000 120,000 323 711 1,055 1,266 1,460
120,000 130,000 369 811 1,205 1,444 1,668
130,000 140,000 415 912 1,354 1,623 1,874
140,000 150,000 461 1,012 1,504 1,802 2,081
150,000 160,000 507 1,113 1,652 1,982 2,287
160,000 170,000 553 1,213 1,802 2,161 2,494
170,000 180,000 598 1,314 1,951 2,340 2,701
180,000 190,000 644 1,415 2,100 2,519 2,908
190,000 200,000 690 1,515 2,250 2,698 3,114
200,000 210,000 736 1,616 2,399 2,877 3,321
210,000 220,000 782 1,716 2,549 3,055 3,528
220,000 230,000 827 1,817 2,698 3,235 3,734
230,000 240,000 873 1,918 2,847 3,413 3,942
240,000 and up 919 2,018 2,997 3,592 4,148

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles (other than leased passenger automobiles) that are first placed in service by the taxpayer during calendar year 2005, and to leased passenger automobiles that are first leased by the taxpayer during calendar year 2005.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information regarding the depreciation limitations and lessee inclusion amounts in this revenue procedure, contact Bernard P. Harvey at (202) 622-3110 (not a toll-free call).


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