The IRS released the inflation-adjusted depreciation limits for business autos, light trucks and vans placed in service by the taxpayer in 2014. Depreciation deduction limits for 2014 are the same as in 2013 for a passenger auto, while most of the limits are $100 higher for a light truck or van.
There is no bonus depreciation for vehicles placed in service in 2014. The bonus depreciation rules for additional first-year depreciation for autos, light trucks and vans (under which the regular first-year dollar limit for eligible vehicles increased by $8,000) only applied to vehicles placed in service before January 1, 2014.
There are two sets of dollar limits for vehicles placed in service by the taxpayer in 2014. One is for passenger autos that are not trucks or vans and are subject to the luxury-auto limits (they are rated at 6,000 pounds unloaded gross vehicle weight or less).
The other is for light trucks or vans (passenger autos built on a truck chassis, including minivans and sport-utility vehicles built on a truck chassis) that are subject to the luxury-auto limits. They are rated at 6,000 pounds gross (loaded) vehicle weight or less. Certain non-personal-use vehicles are exempt from the luxury auto limits regardless of their weight.
Heavy SUVs ((those that are built on a truck chassis and are rated at more than 6,000 pounds gross (loaded) vehicle weight)) are exempt from the luxury-auto dollar caps because they fall outside of the definition of a passenger auto.
The following are the annual depreciation dollar caps for vehicles that are subject to the luxury-auto limits and placed in service by the taxpayer in calendar year 2014.
For an auto (not a truck or van):
$3,160 for the placed-in-service year
$5,100 for the second tax year
$3,050 for the third tax year
$1,875 for each succeeding year
For autos first placed in service in 2014, the dollar figures for all tax years are the same as those that applied for autos placed in service in 2013.
For a light truck or van ((passenger auto built on a truck chassis, including minivan and sport-utility vehicle (SUV) built on a truck chassis)):
$3,460 for the placed-in-service year
$5,500 for the second tax year
$3,350 for the third tax year
$1,975 for each succeeding year
For a light truck or van placed in service in 2014, the dollar figures for the first three years are $100 higher than those that applied for such vehicles first placed in service in 2013. For years after the third year, the 2014 limit is the same as the 2013 limit.
The dollar limits must be reduced proportionately if business/investment use of a vehicle is less than 100%.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.