2017 Car and Truck Depreciation Limits

 
Business use vehicles have several challenges. Part of the challenge is that there are special rules known as “Listed Property” attributes that recognize there are both personal and business attributes associated with the same asset; the vehicle has a “Value” to the individual and their business using the vehicle. Thus the 2017 Car and Truck Depreciation Limits. 1

 

The “Conceptual Challenge: The differences of a “Business Van” say, for a “Construction Person” compared to the “Executive” with a new Mercedes. As a result, congress has limited the amount of depreciation of allowable as a deduction in instances that unfairly allowed wealthy individuals to purchase “expensive” property (vehicles), unfairly taking advantage of available tax incentives not available to most taxpayers.
 

Leveling the Playing Field; with Bonus Depreciation Incentives

This year’s guidance for car and truck depreciation limits includes figures for vehicles that are placed in service in 2017 and to which first-year bonus depreciation applies.
 
If you purchase new property (vehicle) and use it more than 50% for business, certain rules apply; additional deductions may be available. If you don’t qualify for Bonus Depreciation, you might be eligible for example for $3,500 of standard depreciation in the first year, but you might qualify for $11,000 instead. This is the value of qualifying for “Bonus Depreciation”. Because of the complex rules associated with listed property and personal use limitations, Leasing for Business is often an attractive financing alternative allowing the business percentage of your lease payments to be deducted as you use the vehicle and protecting your “Cash Flow” in the meantime.
 
The IRS issued the 2017 inflation adjustments to the depreciation limitations and lease inclusion amounts for certain automobiles under Sec. 280F (Rev. Proc. 2017-29).
 
This year’s guidance includes figures for vehicles that are placed in service in 2017 and to which first-year bonus depreciation applies. For passenger automobiles (other than trucks or vans) placed in service during the calendar year 2017, the depreciation limit under Sec. 280F(d)(7) is $11,160 for the first tax year, including bonus depreciation, and $3,160 if bonus depreciation does not apply.
 
For trucks and vans, the limit is $11,560 for the first tax year if bonus depreciation applies and $3,560 if it does not apply.
 
For passenger automobiles, the limits are $5,100 for the second tax year, $3,050 for the third tax year, and $1,875 for each successive tax year. For trucks and vans, the limits are $5,700 for the second tax year, $3,450 for the third tax year, and $2,075 for each successive tax year.
 
Sec. 280F(c) limits deductions for the cost of leasing automobiles, expressed as an income inclusion amount according to a formula and tables prescribed under Regs. Sec. 1.280F-7.
 
The revenue procedure provides an updated table of the amounts to be included in income by lessees of passenger automobiles and another for trucks and vans, in both cases with lease terms that begin in the calendar year 2017.
 

What’s It All Worth?

There’s no cookie-cutter formula for calculating depreciation values. Talk to us to find out if you qualify for Bonus Depreciations. We can help you navigate the most up-to-date IRS information and opportunities to exercise control to enhance you, and your company’s performance.
 

CONTACT US… Morris+D’Angelo is the industry-leader for many High-Wealth Customers and Organizations.

707 SW Washington St., Suite 1100
Portland, Oregon, 97205

503.749.6300 – Portland Office
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