The IRS recently released Rev. Proc. 2019-26. In this revenue procedure, the IRS provides guidance on the dollar limitations imposed by section 280F on depreciation deductions for passenger automobiles. The guidance reflects the limits applicable to automobiles placed in service during the 2019 calendar year.
The revenue procedure contains three tables for taxpayers’ use in determining the permitted yearly depreciation deductions. These tables, included below, apply to passenger automobiles placed in service during the 2019 calendar year and vary based upon acquisition date and whether bonus depreciation applies:1
Table 1: Bonus depreciation taken on automobile acquired before Sept. 28, 2017
Table 2: Bonus depreciation taken on automobile acquired after Sept. 27, 2017
Table 3: No bonus depreciation taken
The revenue procedure also contains a fourth table that assists lessees of passenger automobiles in determining the appropriate income inclusion amount under Reg. section 1.280F-7(a). Taxpayers may use Table 4 to determine the appropriate dollar amount, based on fair market values, to which lessees must apply the formula found in Reg. section 1.280F‑7(a)(2): generally, a proration for number of leased days followed by a multiplication by the appropriate business/investment use percentage.
Taxpayers may view an advance release copy of Rev. Proc. 2019-26 here.
1. Taxpayers should not use these charts for automobiles placed in service either before or after the 2019 calendar year. The section 280F limitations are indexed for inflation, so taxpayers must look to prior/future guidance for the appropriate limitations applicable to automobiles placed in service during tax years other than 2019.