Internal Revenue Bulletin:  2010-9 

March 1, 2010 

Rev. Proc. 2010-18


SECTION 1. PURPOSE

This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2010, 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 2010, including a separate table of inclusion amounts for lessees of trucks and vans. 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 the taxpayer places the passenger automobile in service and for 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 for trucks and vans since 1988.

.02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased 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 a lessee to include in gross income an inclusion amount determined by applying a formula to the amount obtained from a table. One table applies to lessees of trucks and vans and another table applies to 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 4.01(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 2010, and continue to apply for each taxable year that the passenger automobile remains in service.

.02 The tables in section 4.02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2010. Lessees of these 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. 2005-13, 2005-1 C.B. 759, for passenger automobiles first leased before calendar year 2006; Rev. Proc. 2006-18, 2006-1 C.B. 645, for passenger automobiles first leased during calendar year 2006; Rev. Proc. 2007-30, 2007-1 C.B. 1104, for passenger automobiles first leased during calendar year 2007; Rev. Proc. 2008-22, 2008-12 I.R.B. 658, for passenger automobiles first leased during calendar year 2008; and Rev. Proc. 2009-24, 2009-17 I.R.B. 885, for passenger automobiles first leased during calendar year 2009.

SECTION 4. APPLICATION

.01 Limitations on Depreciation Deductions for Certain Automobiles.

(1) Amount of the inflation adjustment.

(a) Passenger automobiles (other than trucks or vans). 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 new car component of the CPI was 115.2 for October 1987 and 137.851 for October 2009. The October 2009 index exceeded the October 1987 index by 22.651. Therefore, the automobile price inflation adjustment for 2010 for passenger automobiles (other than trucks and vans) is 19.66 percent (22.651/115.2 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.1966, 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 2010. This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2010.

(b) Trucks and vans. To determine the dollar limitations for trucks and vans first placed in service during calendar year 2010, 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 140.897 for October 2009. The October 2009 index exceeded the October 1987 index by 28.497. Therefore, the automobile price inflation adjustment for 2010 for trucks and vans is 25.35 percent (28.497/112.4 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.2535, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. This adjustment applies to all trucks and vans that are first placed in service in calendar year 2010.

(2) Amount of the limitation. Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2010. Use Table 1 for a passenger automobile (other than a truck or van) and Table 2 for a truck or van placed in service in calendar year 2010.

REV. PROC. 2010-18 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2010
Tax Year Amount
1st Tax Year $3,060
2nd Tax Year $4,900
3rd Tax Year $2,950
Each Succeeding Year $1,775
REV. PROC. 2010-18 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2010
Tax Year Amount
1st Tax Year $3,160
2nd Tax Year $5,100
3rd Tax Year $3,050
Each Succeeding Year $1,875

.02 Inclusions in Income of Lessees of Passenger Automobiles.

A taxpayer must follow the procedures in § 1.280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2010. In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure.

REV. PROC. 2010-18 TABLE 3
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & Later
$16,700 $17,000 3 7 10 11 14
17,000 17,500 4 8 13 15 16
17,500 18,000 5 10 16 19 21
18,000 18,500 6 13 18 23 26
18,500 19,000 7 15 22 26 31
19,000 19,500 8 17 25 30 35
19,500 20,000 9 19 29 34 39
20,000 20,500 10 21 32 38 44
20,500 21,000 11 23 35 42 48
21,000 21,500 12 26 38 45 53
21,500 22,000 13 28 41 50 57
22,000 23,000 14 31 46 56 63
23,000 24,000 16 36 52 63 73
24,000 25,000 18 40 59 71 81
25,000 26,000 20 44 66 78 90
26,000 27,000 22 49 71 86 100
27,000 28,000 24 53 78 94 108
28,000 29,000 26 57 85 101 118
29,000 30,000 28 61 92 109 126
30,000 31,000 30 66 97 117 135
31,000 32,000 32 70 104 125 144
32,000 33,000 34 74 111 132 153
33,000 34,000 36 79 117 140 161
34,000 35,000 38 83 123 148 171
35,000 36,000 40 87 130 156 179
36,000 37,000 42 92 136 163 188
37,000 38,000 44 96 143 170 198
38,000 39,000 46 100 149 179 206
39,000 40,000 48 105 155 186 215
40,000 41,000 50 109 162 194 224
41,000 42,000 52 113 169 201 233
42,000 43,000 54 118 174 210 241
43,000 44,000 56 122 181 217 251
44,000 45,000 58 126 188 225 259
45,000 46,000 60 131 194 232 269
46,000 47,000 61 135 201 240 277
47,000 48,000 63 140 207 248 286
48,000 49,000 65 144 213 256 295
49,000 50,000 67 148 220 263 304
50,000 51,000 69 153 226 271 313
51,000 52,000 71 157 232 279 322
52,000 53,000 73 161 239 287 331
53,000 54,000 75 166 245 294 340
54,000 55,000 77 170 252 302 348
55,000 56,000 79 174 258 310 358
56,000 57,000 81 178 265 318 366
57,000 58,000 83 183 271 325 375
58,000 59,000 85 187 278 333 384
59,000 60,000 87 191 284 341 393
60,000 62,000 90 198 294 352 406
62,000 64,000 94 207 306 368 424
64,000 66,000 98 215 320 382 443
66,000 68,000 102 224 332 398 460
68,000 70,000 106 232 346 413 478
70,000 72,000 110 241 358 429 496
72,000 74,000 114 250 371 444 513
74,000 76,000 118 258 384 460 531
76,000 78,000 122 267 396 476 549
78,000 80,000 126 276 409 491 566
80,000 85,000 132 291 432 518 598
85,000 90,000 142 313 464 556 643
90,000 95,000 152 334 497 594 687
95,000 100,000 162 356 528 634 731
100,000 110,000 177 388 577 691 798
110,000 120,000 196 432 641 768 887
120,000 130,000 216 475 705 846 976
130,000 140,000 236 518 770 922 1,065
140,000 150,000 256 561 834 1,000 1,154
150,000 160,000 275 605 898 1,077 1,243
160,000 170,000 295 648 963 1,153 1,333
170,000 180,000 315 691 1,027 1,231 1,421
180,000 190,000 334 735 1,091 1,308 1,510
190,000 200,000 354 778 1,155 1,386 1,599
200,000 210,000 374 821 1,220 1,462 1,688
210,000 220,000 393 865 1,284 1,539 1,777
220,000 230,000 413 908 1,348 1,617 1,866
230,000 240,000 433 951 1,413 1,693 1,956
240,000 and up 453 995 1,476 1,771 2,044
REV. PROC. 2010-18 TABLE 4
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2010
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & Later
17,000 17,500 3 6 9 10 11
17,500 18,000 4 8 12 14 16
18,000 18,500 5 10 15 18 21
18,500 19,000 6 12 19 22 24
19,000 19,500 7 15 21 26 29
19,500 20,000 8 17 25 29 34
20,000 20,500 9 19 28 33 38
20,500 21,000 10 21 31 37 43
21,000 21,500 11 23 35 41 47
21,500 22,000 12 25 38 45 51
22,000 23,000 13 29 42 51 58
23,000 24,000 15 33 49 58 67
24,000 25,000 17 37 56 66 76
25,000 26,000 19 42 62 73 85
26,000 27,000 21 46 68 82 93
27,000 28,000 23 50 75 89 103
28,000 29,000 25 55 81 97 111
29,000 30,000 27 59 88 104 121
30,000 31,000 29 63 94 113 129
31,000 32,000 31 68 100 120 138
32,000 33,000 33 72 107 127 148
33,000 34,000 35 76 114 135 156
34,000 35,000 37 81 119 143 165
35,000 36,000 39 85 126 151 174
36,000 37,000 41 89 133 158 183
37,000 38,000 43 94 139 166 191
38,000 39,000 45 98 145 174 201
39,000 40,000 47 102 152 182 209
40,000 41,000 49 106 159 189 218
41,000 42,000 51 111 164 198 227
42,000 43,000 53 115 171 205 236
43,000 44,000 55 119 178 213 245
44,000 45,000 57 124 184 220 254
45,000 46,000 59 128 190 228 263
46,000 47,000 60 133 197 235 272
47,000 48,000 62 137 203 244 280
48,000 49,000 64 142 209 251 290
49,000 50,000 66 146 216 259 298
50,000 51,000 68 150 223 266 308
51,000 52,000 70 154 229 275 316
52,000 53,000 72 159 235 282 325
53,000 54,000 74 163 242 290 334
54,000 55,000 76 167 249 297 343
55,000 56,000 78 172 254 305 352
56,000 57,000 80 176 261 313 361
57,000 58,000 82 180 268 320 370
58,000 59,000 84 185 274 328 378
59,000 60,000 86 189 280 336 388
60,000 62,000 89 195 291 347 401
62,000 64,000 93 204 303 363 418
64,000 66,000 97 213 315 379 436
66,000 68,000 101 221 329 394 454
68,000 70,000 105 230 341 410 472
70,000 72,000 109 239 354 424 490
72,000 74,000 113 247 367 440 508
74,000 76,000 117 256 380 455 526
76,000 78,000 121 264 393 471 543
78,000 80,000 125 273 406 486 561
80,000 85,000 131 289 428 513 592
85,000 90,000 141 310 461 552 636
90,000 95,000 151 332 492 591 681
95,000 100,000 161 353 525 629 726
100,000 110,000 176 386 573 686 793
110,000 120,000 195 430 637 763 882
120,000 130,000 215 473 701 841 971
130,000 140,000 235 516 766 918 1,059
140,000 150,000 255 559 830 995 1,149
150,000 160,000 274 603 894 1,072 1,238
160,000 170,000 294 646 958 1,150 1,326
170,000 180,000 314 689 1,023 1,226 1,416
180,000 190,000 333 733 1,087 1,303 1,505
190,000 200,000 353 776 1,151 1,381 1,594
200,000 210,000 373 819 1,216 1,457 1,683
210,000 220,000 392 863 1,280 1,534 1,772
220,000 230,000 412 906 1,344 1,612 1,861
230,000 240,000 432 949 1,409 1,689 1,949
240,000 and up 452 992 1,473 1,766 2,039

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2010.

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 this revenue procedure, contact Mr. Harvey at (202) 622-4930 (not a toll-free call).


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