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IRS announces 2011 vehicle depreciation limits without settling "year 2" problem in 100% bonus years.

March 02, 2011

The IRS yesterday issued (Rev. Proc. 2011-21) the maximum vehicle depreciation limits under the so-called "luxury auto" rules of Section 280F. The guidance pointedly leaves open the treatment of vehicles eligible for 100% bonus depreciation in years 2-6 of their depreciation life:

The Service intends to issue additional guidance addressing the interaction between the 100 percent additional first year depreciation deduction and § 280F(a) for the taxable years subsequent to the first taxable year.

The IRS may decide that the year 2-6 limits for such vehicles will be...zero.

For autos qualifying for bonus depreciation placed in service in 2011, the limits are:

Year 1............. $11,060

Year 2.............  $4,900

Year 3...............$2,950

Year 4 and beyond: $1,775

For vehicles not subject to bonus depreciation, the limits are:

Year 1.............. $3,060

Year 2.............  $4,900

Year 3...............$2,950

Year 4 and beyond: $1,775

For light trucks and vans, the limits are:

Year 1............ $11,260 ($3,260 without bonus)

Year 2.............  $5,200

Year 3...............$3,150

Year 4 and beyond: $1,875

But vans and light trucks may also be subject to a year 2-6 "zero" limit.

Tags: bonus depreciation.depreciation.Section 280F.

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