Employers will now be able to calculate the depreciation of vehicles — passenger cars, trucks and vans that they provide to employee as a fringe benefit — that they first put into service in calendar year 2012, since the IRS has released the new depreciation deduction limits.
Revenue Procedure (Rev. Proc.) 2012-23, released March 4, sets depreciation deduction limits for vehicle owners, and inclusion amounts for lessees. Since 1988, the IRS has adjusted both figures for inflation annually.
Passenger Car Limit Unchanged
This year, the IRS did not change the threshold at which it requires lessees to start applying the inclusion amounts on passenger cars. Lessees must begin applying the inclusion amounts on passenger cars with an FMV of $18,500.
Trucks and Vans Limit Unchanged
The IRS also left unchanged the threshold at which it requires lessees to start applying the inclusion amounts on trucks and vans; that is, at an FMV of $19,000 or higher.
Depreciation Limits Up
Since 2003, the IRS has calculated the inflationary adjustments for passenger cars and trucks and vans using a consumer price index (CPI) “automobile component” and the CPI “truck component” for trucks and vans, as required by Code Section 280F. For some vehicles, a “bonus” depreciation applies.
For vehicles to which a bonus depreciation does not apply, the limit is $3,160 (up from $3,060 in 2011) for passenger cars (see Rev. Proc. 2012-23, Table 3).
Trucks and Vans
Trucks and vans to which a bonus depreciation does not apply have a 2012 limit of $3,360 (up from $3,260 in 2011; see Rev. Proc. 2012-23, Table 4.) Tables 3 and 4 of Rev. Proc. 2012-23 also provide the depreciation deduction limits for successive years.