Internal Revenue Bulletin:  2008-12 

March 24, 2008 

Rev. Proc. 2008-22


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 2008, including a separate table of limitations on depreciation deductions for trucks and vans; and (2) the amounts to be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2008, including a separate table of inclusion amounts for lessees of trucks and vans.

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

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. 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.

.02 Section 103 of the Economic Stimulus Act of 2008, Pub. L. No. 110-185, 122 Stat. 613 (Feb. 13, 2008), amended § 168(k). As amended, § 168(k)(1)(A) provides a 50-percent additional first year depreciation deduction for certain new property acquired by the taxpayer after December 31, 2007, and before January 1, 2009, so long as no written binding contract for the acquisition of the property existed prior to January 1, 2008. The Act also amended § 168(k)(2)(F)(i) to increase the first year depreciation allowed under § 280F(a)(1)(A) by $8,000 for passenger automobiles to which the 50-percent additional first year depreciation deduction applies.

.03 Section 168(k)(2)(D)(i) provides that the 50-percent additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of section 168(g), including property described in section 280F(b)(1). Further, section 168(k)(2)(D)(iii) permits a taxpayer to elect not to claim the 50-percent additional first year depreciation deduction for any class of property. Accordingly, this revenue procedure provides tables for passenger automobiles for which the 50-percent additional depreciation deduction applies and tables for passenger automobiles for which the 50-percent additional first year depreciation deduction does not apply, including passenger automobiles in a class of property for which the taxpayer “elects out” of the 50-percent additional first year depreciation deduction.

.04 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) of the Income Tax Regulations, 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 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 taxable 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 2008, and continue to apply for each taxable 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 2008. Lessees of such passenger automobiles must use these tables to determine the inclusion amount for each taxable 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, Rev. Proc. 2004-20, 2004-1 C.B. 642, for passenger automobiles first leased during calendar year 2004, Rev. Proc. 2005-13, 2005-1 C.B. 759, for passenger automobiles first leased during calendar year 2005, Rev. Proc. 2006-18, 2006-1 C.B. 645, for passenger automobiles first leased during calendar year 2006, and Rev. Proc. 2007-30, 2007-18 I.R.B. 1104, for passenger automobiles first leased during calendar year 2007.

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 2008 are found in Tables 1 through 4 in section 4.02(2) of this revenue procedure. Table 1 of this revenue procedure provides limitations on depreciation deductions for a passenger automobile (other than a truck or van) for which the 50-percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50-percent additional first year depreciation deduction. Table 2 of this revenue procedure provides limitations on depreciation deductions for a passenger automobile (other than a truck or van) for which the 50-percent additional first year depreciation deduction applies. Table 3 of this revenue procedure provides limitations on depreciation deductions for a truck or van for which the 50-percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50-percent additional first year depreciation deduction. Table 4 of this revenue procedure provides limitations on depreciation deductions for a truck or van for which the 50-percent additional first year depreciation deduction applies.

(2) Inclusions in Income of Lessees of Passenger Automobiles. A taxpayer first leasing a passenger automobile during calendar year 2008 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 5 in the case of a passenger automobile (other than a truck or van), and Table 6 in the case of a truck or van. 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 135.169 for October 2007. The October 2007 index exceeded the October 1987 index by 19.969. The Internal Revenue Service has, therefore, determined that the automobile price inflation adjustment for 2008 for passenger automobiles (other than trucks and vans) is 17.33 percent (19.969/115.2 x 100%). This adjustment is applicable to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2008. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.1733, 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 and vans) for calendar year 2008. To determine the dollar limitations applicable to trucks and vans first placed in service during calendar year 2008, 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 139.513 for October 2007. The October 2007 index exceeded the October 1987 index by 27.113. The Service has, therefore, determined that the automobile price inflation adjustment for 2008 for trucks and vans is 24.12 percent (27.113/112.4 x 100%). This adjustment is applicable to all trucks and vans that are first placed in service in calendar year 2008. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.2412, 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 2008, Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year. Use Table 1 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2008, for which the 50-percent additional first year depreciation deduction does not apply, including a passenger automobile (other than a truck or van) in a class of property for which the taxpayer elects out of the 50-percent additional first year depreciation deduction. Use Table 2 for a passenger automobile (other than a truck or van) placed in service by the taxpayer in calendar year 2008, for which the 50-percent additional first year depreciation deduction applies. Use Table 3 for a truck or van placed in service by the taxpayer in calendar year 2008, for which the 50-percent additional first year depreciation deduction does not apply, including a truck or van in a class of property for which the taxpayer elects out of the 50-percent additional first year depreciation deduction. Use Table 4 for a truck or van placed in service by the taxpayer in calendar year 2008, for which the 50-percent additional first year depreciation deduction applies.

REV. PROC. 2008-22 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES(THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY
Tax Year Amount
1st Tax Year $2,960
2nd Tax Year $4,800
3rd Tax Year $2,850
Each Succeeding Year $1,775
REV. PROC. 2008-22 TABLE 2
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES(THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $10,960
2nd Tax Year $4,800
3rd Tax Year $2,850
Each Succeeding Year $1,775
REV. PROC. 2008-22 TABLE 3
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY
Tax Year Amount
1st Tax Year $3,160
2nd Tax Year $5,100
3rd Tax Year $3,050
Each Succeeding Year $1,875
REV. PROC. 2008-22 TABLE 4
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE BY THE TAXPAYER IN CALENDAR YEAR 2008, FOR WHICH THE 50-PERCENT ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $11,160
2nd Tax Year $5,100
3rd Tax Year $3,050
Each Succeeding Year $1,875

.03 Inclusions in Income of Lessees of Passenger Automobiles.

The inclusion amounts for passenger automobiles first leased in calendar year 2008 are calculated under the procedures described in § 1.280F-7(a). Lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure in applying these procedures, while lessees of trucks and vans should use Table 6 of this revenue procedure.

REV. PROC. 2008-22 TABLE 5
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2008
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & Later
$18,500 $19,000 20 42 62 73 84
19,000 19,500 22 47 71 83 94
19,500 20,000 25 53 78 93 106
20,000 20,500 27 58 87 102 117
20,500 21,000 30 63 95 112 128
21,000 21,500 32 69 103 122 139
21,500 22,000 34 75 111 131 151
22,000 23,000 38 83 123 146 167
23,000 24,000 43 94 139 165 190
24,000 25,000 48 105 155 185 212
25,000 26,000 53 115 172 204 235
26,000 27,000 58 126 188 223 257
27,000 28,000 63 137 204 243 279
28,000 29,000 68 148 220 262 302
29,000 30,000 73 159 236 282 324
30,000 31,000 78 170 252 301 347
31,000 32,000 83 181 268 321 368
32,000 33,000 88 192 284 340 391
33,000 34,000 93 202 301 359 414
34,000 35,000 98 213 317 379 436
35,000 36,000 103 224 333 398 459
36,000 37,000 108 235 349 418 481
37,000 38,000 113 246 365 437 503
38,000 39,000 118 257 381 457 525
39,000 40,000 123 268 397 476 548
40,000 41,000 128 279 413 495 571
41,000 42,000 133 289 430 515 593
42,000 43,000 137 301 446 534 615
43,000 44,000 142 312 462 553 638
44,000 45,000 147 323 478 573 659
45,000 46,000 152 333 495 592 682
46,000 47,000 157 344 511 611 705
47,000 48,000 162 355 527 631 727
48,000 49,000 167 366 543 650 750
49,000 50,000 172 377 559 670 772
50,000 51,000 177 388 575 689 794
51,000 52,000 182 399 591 709 816
52,000 53,000 187 410 607 728 839
53,000 54,000 192 420 624 747 862
54,000 55,000 197 431 640 767 884
55,000 56,000 202 442 657 785 906
56,000 57,000 207 453 673 805 928
57,000 58,000 212 464 689 824 951
58,000 59,000 217 475 705 844 973
59,000 60,000 222 486 721 863 996
60,000 62,000 229 502 746 892 1,029
62,000 64,000 239 524 778 931 1,074
64,000 66,000 249 546 810 970 1,118
66,000 68,000 259 567 843 1,008 1,164
68,000 70,000 269 589 875 1,047 1,209
70,000 72,000 279 611 907 1,086 1,253
72,000 74,000 289 633 939 1,125 1,298
74,000 76,000 299 654 972 1,164 1,342
76,000 78,000 309 676 1,004 1,203 1,387
78,000 80,000 319 698 1,036 1,242 1,432
80,000 85,000 336 736 1,093 1,309 1,511
85,000 90,000 361 791 1,173 1,406 1,623
90,000 95,000 386 845 1,255 1,503 1,734
95,000 100,000 410 900 1,335 1,600 1,846
100,000 110,000 448 981 1,457 1,745 2,014
110,000 120,000 497 1,090 1,619 1,939 2,238
120,000 130,000 547 1,199 1,780 2,133 2,462
130,000 140,000 597 1,308 1,942 2,327 2,685
140,000 150,000 646 1,417 2,103 2,521 2,910
150,000 160,000 696 1,526 2,265 2,715 3,133
160,000 170,000 745 1,635 2,427 2,908 3,357
170,000 180,000 795 1,744 2,588 3,103 3,581
180,000 190,000 845 1,853 2,750 3,296 3,805
190,000 200,000 894 1,962 2,912 3,490 4,028
200,000 210,000 944 2,071 3,073 3,684 4,252
210,000 220,000 994 2,179 3,235 3,878 4,476
220,000 230,000 1,043 2,289 3,396 4,072 4,700
230,000 240,000 1,093 2,397 3,559 4,265 4,924
240,000 and up 1,142 2,507 3,720 4,459 5,148
REV. PROC. 2008-22 TABLE 6
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2008
Fair Market Value of Truck or Van Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & later
$19,000 $19,500 17 37 54 65 73
19,500 20,000 20 42 63 73 85
20,000 20,500 22 48 70 84 96
20,500 21,000 25 53 79 93 107
21,000 21,500 27 59 86 103 118
21,500 22,000 30 64 95 112 130
22,000 23,000 33 72 107 128 146
23,000 24,000 38 83 123 147 168
24,000 25,000 43 94 139 166 191
25,000 26,000 48 105 155 186 213
26,000 27,000 53 116 171 205 236
27,000 28,000 58 127 187 225 258
28,000 29,000 63 138 204 243 280
29,000 30,000 68 148 221 263 302
30,000 31,000 73 159 237 282 325
31,000 32,000 78 170 253 301 348
32,000 33,000 83 181 269 321 370
33,000 34,000 88 192 285 340 393
34,000 35,000 93 203 301 360 414
35,000 36,000 98 214 317 379 437
36,000 37,000 103 225 333 399 459
37,000 38,000 108 235 350 418 482
38,000 39,000 113 246 366 437 505
39,000 40,000 118 257 382 457 526
40,000 41,000 123 268 398 476 549
41,000 42,000 128 279 414 496 571
42,000 43,000 133 290 430 515 594
43,000 44,000 137 301 447 534 616
44,000 45,000 142 312 463 553 639
45,000 46,000 147 323 479 573 661
46,000 47,000 152 334 495 592 684
47,000 48,000 157 345 511 612 705
48,000 49,000 162 356 527 631 728
49,000 50,000 167 366 544 651 750
50,000 51,000 172 377 560 670 773
51,000 52,000 177 388 576 689 796
52,000 53,000 182 399 592 709 817
53,000 54,000 187 410 608 728 840
54,000 55,000 192 421 624 748 862
55,000 56,000 197 432 640 767 885
56,000 57,000 202 443 656 787 907
57,000 58,000 207 453 673 806 929
58,000 59,000 212 464 689 825 952
59,000 60,000 217 475 705 845 974
60,000 62,000 224 492 729 874 1,008
62,000 64,000 234 513 762 913 1,052
64,000 66,000 244 535 794 951 1,098
66,000 68,000 254 557 826 990 1,142
68,000 70,000 264 579 858 1,029 1,187
70,000 72,000 274 600 892 1,067 1,232
72,000 74,000 284 622 924 1,106 1,276
74,000 76,000 294 644 956 1,145 1,321
76,000 78,000 304 666 988 1,184 1,366
78,000 80,000 314 687 1,021 1,222 1,411
80,000 85,000 331 726 1,077 1,290 1,489
85,000 90,000 356 780 1,158 1,387 1,601
90,000 95,000 381 835 1,238 1,484 1,713
95,000 100,000 405 889 1,320 1,581 1,825
100,000 110,000 443 971 1,440 1,727 1,993
110,000 120,000 492 1,080 1,602 1,921 2,216
120,000 130,000 542 1,189 1,764 2,114 2,440
130,000 140,000 592 1,297 1,926 2,308 2,665
140,000 150,000 641 1,407 2,087 2,502 2,888
150,000 160,000 691 1,515 2,249 2,696 3,112
160,000 170,000 740 1,625 2,410 2,890 3,336
170,000 180,000 790 1,733 2,573 3,083 3,560
180,000 190,000 840 1,842 2,734 3,278 3,783
190,000 200,000 889 1,951 2,896 3,472 4,007
200,000 210,000 939 2,060 3,058 3,665 4,231
210,000 220,000 989 2,169 3,219 3,859 4,455
220,000 230,000 1,038 2,278 3,381 4,053 4,678
230,000 240,000 1,088 2,387 3,542 4,247 4,903
240,000 and up 1,137 2,496 3,704 4,441 5,126

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 2008, and to leased passenger automobiles that are first leased by the taxpayer during calendar year 2008.

SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding the depreciation limitations and lessee inclusion amounts in this revenue procedure, contact Bernard P. Harvey at (202) 622-4930 (not a toll-free call).


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