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Internal Revenue Bulletin:  2017-14 

April 3, 2017 

Rev. Proc. 2017–29


SECTION 1. PURPOSE

This revenue procedure provides: (1) tables of limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2017, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) tables of amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2017, 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).

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 168(k)(1) provides that, in the case of qualified property, the depreciation deduction allowed under § 167(a) for the taxable year in which the property is placed in service includes an allowance equal to 50 percent of the property’s adjusted basis (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”). The § 168(k) additional first year depreciation deduction generally applies to qualified property placed in service before January 1, 2020. Section 168(k)(2)(F)(i) and (iii) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles placed in service by the taxpayer before January 1, 2018, and to which the § 168(k) additional first year depreciation deduction applies.

.03 Tables 1 through 4 of this revenue procedure provide depreciation limitations for passenger automobiles placed in service during calendar year 2017. Table 1 (passenger automobiles that are not trucks or vans) and Table 2 (trucks and vans) provide depreciation limitations for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Table 3 (passenger automobiles that are not trucks or vans) and Table 4 (trucks and vans) provide depreciation limitations for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply. The § 168(k) additional first year depreciation deduction does not apply for 2017 if the taxpayer: (1) acquired the passenger automobile used; (2) did not use the passenger automobile during 2017 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(7); or (4) elected to increase the alternative minimum tax (AMT) credit limitation under § 53, instead of claiming the § 168(k) additional first year depreciation deduction, for qualified property placed in service during 2017 pursuant to § 168(k)(4).

.04 Section 280F(c)(2) 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. Table 5 applies to lessees of passenger automobiles that are not trucks and vans and Table 6 applies to lessees of trucks and vans. 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 2017, 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 2017. 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. 2012–23, 2012–14 I.R.B. 712, for passenger automobiles first leased during calendar year 2012; Rev. Proc. 2013–21, 2013–12 I.R.B. 660, for passenger automobiles first leased during calendar year 2013; Rev. Proc. 2014–21, 2014–11 I.R.B. 641, as amplified and modified by section 4.03 of Rev. Proc. 2015–19, 2015–8 I.R.B. 656, for passenger automobiles first leased during calendar year 2014; Rev. Proc. 2015–19, as amplified and modified by section 4.03 of Rev. Proc. 2016–23, 2016–16 I.R.B. 581, for passenger automobiles first leased during calendar year 2015, and Rev. Proc. 2016–23 for passenger automobiles first leased during calendar year 2016.

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 143.032 for October 2016. The October 2016 index exceeded the October 1987 index by 27.832. Therefore, the automobile price inflation adjustment for 2017 for passenger automobiles (other than trucks and vans) is 24.2 percent (27.832/115.2 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.242, 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 2017. This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2017.

(b) Trucks and vans. To determine the dollar limitations for trucks and vans first placed in service during calendar year 2017, 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 156.189 for October 2016. The October 2016 index exceeded the October 1987 index by 43.789. Therefore, the automobile price inflation adjustment for 2017 for trucks and vans is 39.0 percent (43.789/112.4 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.390, 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. This adjustment applies to all trucks and vans that are first placed in service in calendar year 2017.

(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 2017. 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 2017 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 2017 for which the § 168(k) additional first year depreciation deduction does not apply.

REV. PROC. 2017–29 TABLE 1
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2017 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. 2017–29 TABLE 2
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2017 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES
Tax Year Amount
1st Tax Year $ 11,560
2nd Tax Year $ 5,700
3rd Tax Year $ 3,450
Each Succeeding Year $ 2,075
 REV. PROC. 2017–29 TABLE 3
DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2017 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. 2017–29 TABLE 4
DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2017 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY
Tax Year Amount
1st Tax Year $ 3,560
2nd Tax Year $ 5,700
3rd Tax Year $ 3,450
Each Succeeding Year $ 2,075

.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 2017. 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. 2017–29 TABLE 5
DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2017
Fair Market Value of Passenger Automobile Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & later
$19,000 $19,500 6 14 20 23 27
19,500 20,000 7 16 23 27 31
20,000 20,500 8 18 26 30 35
20,500 21,000 9 20 28 35 39
21,000 21,500 10 21 32 38 44
21,500 22,000 11 23 35 42 47
22,000 23,000 12 27 39 47 53
23,000 24,000 14 31 45 54 62
24,000 25,000 16 34 52 61 70
25,000 26,000 18 38 58 68 78
26,000 27,000 19 43 63 75 87
27,000 28,000 21 47 69 82 95
28,000 29,000 23 51 75 89 103
29,000 30,000 25 55 80 97 112
30,000 31,000 27 58 87 104 120
31,000 32,000 29 62 93 111 128
32,000 33,000 30 67 99 118 136
33,000 34,000 32 71 104 126 144
34,000 35,000 34 75 110 133 152
35,000 36,000 36 79 116 140 160
36,000 37,000 38 82 123 147 169
37,000 38,000 40 86 129 154 177
38,000 39,000 41 91 134 161 186
39,000 40,000 43 95 140 168 194
40,000 41,000 45 99 146 175 202
41,000 42,000 47 103 152 182 210
42,000 43,000 49 106 159 189 218
43,000 44,000 50 111 164 197 226
44,000 45,000 52 115 170 204 234
45,000 46,000 54 119 176 211 243
46,000 47,000 56 123 182 218 251
47,000 48,000 58 127 187 225 260
48,000 49,000 60 130 194 232 268
49,000 50,000 61 135 200 239 276
50,000 51,000 63 139 206 246 284
51,000 52,000 65 143 211 254 292
52,000 53,000 67 147 217 261 301
53,000 54,000 69 151 223 268 309
54,000 55,000 70 155 229 275 318
55,000 56,000 72 159 235 282 326
56,000 57,000 74 163 241 289 334
57,000 58,000 76 167 247 296 342
58,000 59,000 78 171 253 303 350
59,000 60,000 80 174 260 310 359
60,000 62,000 82 181 268 321 371
62,000 64,000 86 189 280 335 387
64,000 66,000 90 197 292 349 404
66,000 68,000 93 205 304 364 420
68,000 70,000 97 213 315 379 436
70,000 72,000 101 221 327 393 453
72,000 74,000 104 229 339 407 470
74,000 76,000 108 237 351 421 486
76,000 78,000 111 245 363 436 502
78,000 80,000 115 253 375 450 518
80,000 85,000 122 267 396 474 548
85,000 90,000 131 287 425 511 588
90,000 95,000 140 307 455 546 630
95,000 100,000 149 327 485 581 671
100,000 110,000 162 357 530 635 733
110,000 120,000 181 397 589 706 815
120,000 130,000 199 437 649 777 898
130,000 140,000 217 477 708 849 980
140,000 150,000 235 517 768 920 1,062
150,000 160,000 254 557 827 991 1,145
160,000 170,000 272 597 887 1,062 1,227
170,000 180,000 290 637 946 1,134 1,309
180,000 190,000 308 677 1,006 1,205 1,391
190,000 200,000 326 718 1,064 1,277 1,473
200,000 210,000 345 757 1,124 1,348 1,556
210,000 220,000 363 797 1,184 1,419 1,638
220,000 230,000 381 837 1,244 1,490 1,721
230,000 240,000 399 878 1,302 1,562 1,803
240,000 and over 418 917 1,362 1,633 1,885
REV. PROC. 2017–29 TABLE 6
DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2017
Fair Market Value of Truck or Van Tax Year During Lease
Over Not Over 1st 2nd 3rd 4th 5th & later
$19,500 $20,000 4 8 11 13 16
20,000 20,500 4 10 14 17 20
20,500 21,000 5 12 17 21 23
21,000 21,500 6 14 20 24 28
21,500 22,000 7 16 23 28 32
22,000 23,000 9 19 27 33 38
23,000 24,000 10 23 34 40 46
24,000 25,000 12 27 39 48 54
25,000 26,000 14 31 45 55 62
26,000 27,000 16 35 51 62 71
27,000 28,000 18 39 57 69 79
28,000 29,000 19 43 63 76 88
29,000 30,000 21 47 69 83 96
30,000 31,000 23 51 75 90 104
31,000 32,000 25 55 81 97 112
32,000 33,000 27 59 87 104 120
33,000 34,000 29 63 93 111 129
34,000 35,000 30 67 99 119 136
35,000 36,000 32 71 105 126 145
36,000 37,000 34 75 111 133 153
37,000 38,000 36 79 117 140 161
38,000 39,000 38 83 122 148 169
39,000 40,000 40 87 128 155 177
40,000 41,000 41 91 135 161 186
41,000 42,000 43 95 141 168 194
42,000 43,000 45 99 146 176 203
43,000 44,000 47 103 152 183 211
44,000 45,000 49 107 158 190 219
45,000 46,000 50 111 165 196 228
46,000 47,000 52 115 170 204 236
47,000 48,000 54 119 176 211 244
48,000 49,000 56 123 182 218 252
49,000 50,000 58 127 188 225 261
50,000 51,000 60 131 194 232 269
51,000 52,000 61 135 200 240 277
52,000 53,000 63 139 206 247 285
53,000 54,000 65 143 212 254 293
54,000 55,000 67 147 218 261 301
55,000 56,000 69 151 224 268 309
56,000 57,000 70 155 230 275 318
57,000 58,000 72 159 236 282 326
58,000 59,000 74 163 242 289 335
59,000 60,000 76 167 248 296 343
60,000 62,000 79 173 256 308 355
62,000 64,000 82 181 269 321 372
64,000 66,000 86 189 280 336 388
66,000 68,000 90 197 292 350 404
68,000 70,000 93 205 304 365 420
70,000 72,000 97 213 316 379 437
72,000 74,000 101 221 328 393 453
74,000 76,000 104 229 340 407 470
76,000 78,000 108 237 352 421 487
78,000 80,000 111 245 364 436 503
80,000 85,000 118 259 384 461 532
85,000 90,000 127 279 414 497 573
90,000 95,000 136 299 444 532 614
95,000 100,000 145 319 474 567 656
100,000 110,000 159 349 518 621 717
110,000 120,000 177 389 578 692 800
120,000 130,000 195 429 637 764 882
130,000 140,000 213 470 696 835 964
140,000 150,000 232 509 756 906 1,047
150,000 160,000 250 549 816 977 1,129
160,000 170,000 268 589 875 1,049 1,211
170,000 180,000 286 630 934 1,120 1,293
180,000 190,000 305 669 994 1,191 1,376
190,000 200,000 323 709 1,054 1,262 1,458
200,000 210,000 341 750 1,112 1,334 1,540
210,000 220,000 359 790 1,172 1,405 1,623
220,000 230,000 377 830 1,231 1,477 1,705
230,000 240,000 396 870 1,290 1,548 1,787
240,000 and over 414 910 1,350 1,619 1,870

SECTION 5. EFFECTIVE DATE

This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2017.

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) 317-7005 (not a toll-free number).


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