Internal Revenue Bulletin:  2013-12 

March 18, 2013 

Rev. Proc. 2013-21


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 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, 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. For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. 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 331(a) of the American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, 126 Stat. 2313 (Jan. 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014.

Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies.

.03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)).

Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation.

.04 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 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 2013, 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 2013. 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. 2008-22, 2008-1 C.B. 658, for passenger automobiles first leased during calendar year 2008; Rev. Proc. 2009-24, 2009-17 I.R.B. 885, for passenger automobiles first leased during calendar year 2009; Rev. Proc. 2010-18, 2010-09 I.R.B. 427, as amplified and modified by section 4.03 of Rev. Proc. 2011-21, 2011-12 I.R.B. 560, for passenger automobiles first leased during calendar year 2010; Rev. Proc. 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. Proc. 2012-23, 2012-14 I.R.B. 712, for passenger automobiles first leased during calendar year 2012.

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. Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” 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 143.787 for October 2012. The October 2012 index exceeded the October 1987 index by 28.587. Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24.8 percent (28.587/115.2 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.248, 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 2013. This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013.

(b) Trucks and vans. To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 149.386 for October 2012. The October 2012 index exceeded the October 1987 index by 36.986. Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32.9 percent (36.986/112.4 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.329, 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 2013.

(2) Amount of the limitation. Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. 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 2013 for which the § 168(k) additional first year depreciation deduction applies. Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply.

REV. PROC. 2013-21 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) 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
REV. PROC. 2013-21 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $11,360
2nd Tax Year $5,400
3rd Tax Year $3,250
Each Succeeding Year $1,975
REV. PROC. 2013-21 TABLE 3
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) 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. 2013-21 TABLE 4
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY
Tax Year Amount
1st Tax Year $3,360
2nd Tax Year $5,400
3rd Tax Year $3,250
Each Succeeding Year $1,975

.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 2013. In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure.

REV. PROC. 2013-21 TABLE 5
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & later
$19,000 $19,500 2 4 6 7 8
19,500 20,000 2 5 6 9 9
20,000 20,500 2 5 8 9 11
20,500 21,000 3 6 8 10 12
21,000 21,500 3 6 10 11 13
21,500 22,000 3 7 10 13 14
22,000 23,000 4 8 11 14 16
23,000 24,000 4 9 14 16 18
24,000 25,000 5 10 15 18 21
25,000 26,000 5 12 16 21 23
26,000 27,000 6 12 19 23 25
27,000 28,000 6 14 20 25 28
28,000 29,000 7 15 22 27 30
29,000 30,000 7 16 24 29 33
30,000 31,000 8 17 26 31 35
31,000 32,000 8 19 27 33 38
32,000 33,000 9 20 29 35 40
33,000 34,000 10 21 31 37 43
34,000 35,000 10 22 33 39 45
35,000 36,000 11 23 35 41 48
36,000 37,000 11 25 36 43 50
37,000 38,000 12 26 38 45 53
38,000 39,000 12 27 40 47 55
39,000 40,000 13 28 42 49 58
40,000 41,000 13 29 44 52 59
41,000 42,000 14 30 45 54 63
42,000 43,000 14 32 47 56 64
43,000 44,000 15 33 48 59 67
44,000 45,000 15 34 51 60 69
45,000 46,000 16 35 52 63 72
46,000 47,000 17 36 54 65 74
47,000 48,000 17 38 55 67 77
48,000 49,000 18 39 57 69 79
49,000 50,000 18 40 59 71 82
50,000 51,000 19 41 61 73 84
51,000 52,000 19 42 63 75 87
52,000 53,000 20 43 65 77 89
53,000 54,000 20 45 66 79 92
54,000 55,000 21 46 68 81 94
55,000 56,000 21 47 70 84 96
56,000 57,000 22 48 72 85 99
57,000 58,000 22 50 73 88 101
58,000 59,000 23 51 75 90 103
59,000 60,000 24 52 76 92 106
60,000 62,000 24 54 79 95 110
62,000 64,000 25 56 83 99 115
64,000 66,000 27 58 87 103 120
66,000 68,000 28 60 90 108 125
68,000 70,000 29 63 93 112 130
70,000 72,000 30 65 97 117 134
72,000 74,000 31 68 100 121 139
74,000 76,000 32 70 104 125 144
76,000 78,000 33 73 107 129 149
78,000 80,000 34 75 111 133 154
80,000 85,000 36 79 117 141 162
85,000 90,000 39 85 126 151 174
90,000 95,000 41 91 135 162 186
95,000 100,000 44 97 144 172 199
100,000 110,000 48 106 157 188 217
110,000 120,000 53 118 174 210 241
120,000 130,000 59 129 193 230 266
130,000 140,000 64 141 210 252 290
140,000 150,000 70 153 227 273 315
150,000 160,000 75 165 245 294 339
160,000 170,000 80 177 263 315 363
170,000 180,000 86 189 280 336 388
180,000 190,000 91 201 298 357 412
190,000 200,000 97 212 316 378 436
200,000 210,000 102 224 333 400 461
210,000 220,000 107 236 351 420 486
220,000 230,000 113 248 368 442 509
230,000 240,000 118 260 386 463 534
240,000 And up 124 272 403 484 558
REV. PROC. 2013-21 TABLE 6
DOLLAR AMOUNTS FOR TRUCKS AND VANS
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013
Fair Market Value of Truck or Van Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & later
$19,000 $19,500 1 3 4 5 6
19,500 20,000 2 3 5 6 7
20,000 20,500 2 4 6 7 8
20,500 21,000 2 5 7 8 9
21,000 21,500 2 5 8 9 11
21,500 22,000 3 6 8 10 12
22,000 23,000 3 7 10 11 14
23,000 24,000 4 8 11 14 16
24,000 25,000 4 9 14 16 18
25,000 26,000 5 10 15 18 21
26,000 27,000 5 12 17 20 23
27,000 28,000 6 13 18 23 25
28,000 29,000 6 14 20 25 28
29,000 30,000 7 15 22 27 30
30,000 31,000 7 16 24 29 33
31,000 32,000 8 17 26 31 35
32,000 33,000 8 19 27 33 38
33,000 34,000 9 20 29 35 41
34,000 35,000 10 21 31 37 43
35,000 36,000 10 22 33 39 46
36,000 37,000 11 23 35 41 48
37,000 38,000 11 25 36 43 51
38,000 39,000 12 26 38 45 53
39,000 40,000 12 27 40 48 55
40,000 41,000 13 28 42 49 58
41,000 42,000 13 29 44 52 60
42,000 43,000 14 30 46 54 62
43,000 44,000 14 32 47 56 65
44,000 45,000 15 33 48 59 67
45,000 46,000 15 34 51 60 70
46,000 47,000 16 35 52 63 72
47,000 48,000 17 36 54 65 74
48,000 49,000 17 38 55 67 77
49,000 50,000 18 39 57 69 79
50,000 51,000 18 40 59 71 82
51,000 52,000 19 41 61 73 84
52,000 53,000 19 42 63 75 87
53,000 54,000 20 43 65 77 89
54,000 55,000 20 45 66 80 91
55,000 56,000 21 46 68 81 94
56,000 57,000 21 47 70 84 96
57,000 58,000 22 48 72 86 98
58,000 59,000 22 50 73 88 101
59,000 60,000 23 51 75 90 103
60,000 62,000 24 52 78 93 108
62,000 64,000 25 55 81 97 113
64,000 66,000 26 57 85 101 118
66,000 68,000 27 60 88 106 122
68,000 70,000 28 62 92 110 127
70,000 72,000 29 64 96 114 132
72,000 74,000 30 67 99 118 137
74,000 76,000 31 69 103 122 142
76,000 78,000 32 72 105 127 147
78,000 80,000 34 73 110 131 151
80,000 85,000 35 78 116 138 160
85,000 90,000 38 84 124 149 172
90,000 95,000 41 90 133 160 184
95,000 100,000 44 95 142 171 196
100,000 110,000 48 104 156 186 214
110,000 120,000 53 116 173 207 240
120,000 130,000 58 128 191 228 264
130,000 140,000 64 140 208 249 288
140,000 150,000 69 152 226 270 313
150,000 160,000 75 164 243 292 336
160,000 170,000 80 176 261 312 361
170,000 180,000 85 188 278 334 386
180,000 190,000 91 199 296 355 410
190,000 200,000 96 211 314 376 434
200,000 210,000 101 223 332 397 459
210,000 220,000 107 235 349 418 483
220,000 230,000 112 247 367 439 507
230,000 240,000 118 259 384 460 532
240,000 And up 123 271 401 482 556

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013.

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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