Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Efile Tax Returns

Irs Tax Form 1040Www Irs Gov Form 1040xIrs Form Ez 1040Free 1040ezEfile 1040nr1o40 Ez FormFill Out 1040ez2013 Amended Tax ReturnFree State And Federal Tax EfileIrs Form 1040x 2012Free Tax Preparation ServicesH R Block TaxHandr Block Free FileWhere Can I File 2012 TaxesIrs Estimated Tax Forms 2011Irs ProblemsH&r Block Free Tax File 2012Tax File ExtensionEtaxPast Year TaxesFree State Income Tax Forms2011 Tax Forms Federal2013 Tax Form 1040xI Need To File My 2011 Tax ReturnFile Taxes OnlineTax 2011 Form1040 Ez 2011Tax Forms 1040ezIrs Forms 1040 2011Irs Com GovIrs Govefile2012 TaxTaxes 2006H And R Block Free Tax Return2011 1040ez InstructionsHow Amend A Tax ReturnFile 2011 Tax Return FreeFile State Income Tax For FreeComplete Tax Free FileIrs Form 1040

Efile Tax Returns

Efile tax returns 2. Efile tax returns   Depreciation of Rental Property Table of Contents The BasicsWhat Rental Property Can Be Depreciated? When Does Depreciation Begin and End? Depreciation Methods Basis of Depreciable Property Claiming the Special Depreciation Allowance MACRS DepreciationDepreciation Systems Property Classes Under GDS Recovery Periods Under GDS Conventions Figuring Your Depreciation Deduction Figuring MACRS Depreciation Under ADS Claiming the Correct Amount of Depreciation You recover the cost of income producing property through yearly tax deductions. Efile tax returns You do this by depreciating the property; that is, by deducting some of the cost each year on your tax return. Efile tax returns Three factors determine how much depreciation you can deduct each year: (1) your basis in the property, (2) the recovery period for the property, and (3) the depreciation method used. Efile tax returns You cannot simply deduct your mortgage or principal payments, or the cost of furniture, fixtures and equipment, as an expense. Efile tax returns You can deduct depreciation only on the part of your property used for rental purposes. Efile tax returns Depreciation reduces your basis for figuring gain or loss on a later sale or exchange. Efile tax returns You may have to use Form 4562 to figure and report your depreciation. Efile tax returns See Which Forms To Use in chapter 3. Efile tax returns Also see Publication 946. Efile tax returns Section 179 deduction. Efile tax returns   The section 179 deduction is a means of recovering part or all of the cost of certain qualifying property in the year you place the property in service. Efile tax returns This deduction is not allowed for property used in connection with residential rental property. Efile tax returns See chapter 2 of Publication 946. Efile tax returns Alternative minimum tax (AMT). Efile tax returns   If you use accelerated depreciation, you may be subject to the AMT. Efile tax returns Accelerated depreciation allows you to deduct more depreciation earlier in the recovery period than you could deduct using a straight line method (same deduction each year). Efile tax returns   The prescribed depreciation methods for rental real estate are not accelerated, so the depreciation deduction is not adjusted for the AMT. Efile tax returns However, accelerated methods are generally used for other property connected with rental activities (for example, appliances and wall-to-wall carpeting). Efile tax returns   To find out if you are subject to the AMT, see the Instructions for Form 6251. Efile tax returns The Basics The following section discusses the information you will need to have about the rental property and the decisions to be made before figuring your depreciation deduction. Efile tax returns What Rental Property Can Be Depreciated? You can depreciate your property if it meets all the following requirements. Efile tax returns You own the property. Efile tax returns You use the property in your business or income-producing activity (such as rental property). Efile tax returns The property has a determinable useful life. Efile tax returns The property is expected to last more than one year. Efile tax returns Property you own. Efile tax returns   To claim depreciation, you usually must be the owner of the property. Efile tax returns You are considered as owning property even if it is subject to a debt. Efile tax returns Rented property. Efile tax returns   Generally, if you pay rent for property, you cannot depreciate that property. Efile tax returns Usually, only the owner can depreciate it. Efile tax returns However, if you make permanent improvements to leased property, you may be able to depreciate the improvements. Efile tax returns See Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Efile tax returns Cooperative apartments. Efile tax returns   If you are a tenant-stockholder in a cooperative housing corporation and rent your cooperative apartment to others, you can deduct depreciation on your stock in the corporation. Efile tax returns See chapter 4, Special Situations. Efile tax returns Property having a determinable useful life. Efile tax returns   To be depreciable, your property must have a determinable useful life. Efile tax returns This means that it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Efile tax returns What Rental Property Cannot Be Depreciated? Certain property cannot be depreciated. Efile tax returns This includes land and certain excepted property. Efile tax returns Land. Efile tax returns   You cannot depreciate the cost of land because land generally does not wear out, become obsolete, or get used up. Efile tax returns But if it does, the loss is accounted for upon disposition. Efile tax returns The costs of clearing, grading, planting, and landscaping are usually all part of the cost of land and cannot be depreciated. Efile tax returns   Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping costs, incurred in preparing land for business use. Efile tax returns These costs must be so closely associated with other depreciable property that you can determine a life for them along with the life of the associated property. Efile tax returns Example. Efile tax returns You built a new house to use as a rental and paid for grading, clearing, seeding, and planting bushes and trees. Efile tax returns Some of the bushes and trees were planted right next to the house, while others were planted around the outer border of the lot. Efile tax returns If you replace the house, you would have to destroy the bushes and trees right next to it. Efile tax returns These bushes and trees are closely associated with the house, so they have a determinable useful life. Efile tax returns Therefore, you can depreciate them. Efile tax returns Add your other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them. Efile tax returns Excepted property. Efile tax returns   Even if the property meets all the requirements listed earlier under What Rental Property Can Be Depreciated , you cannot depreciate the following property. Efile tax returns Property placed in service and disposed of (or taken out of business use) in the same year. Efile tax returns Equipment used to build capital improvements. Efile tax returns You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Efile tax returns For more information, see chapter 1 of Publication 946. Efile tax returns When Does Depreciation Begin and End? You begin to depreciate your rental property when you place it in service for the production of income. Efile tax returns You stop depreciating it either when you have fully recovered your cost or other basis, or when you retire it from service, whichever happens first. Efile tax returns Placed in Service You place property in service in a rental activity when it is ready and available for a specific use in that activity. Efile tax returns Even if you are not using the property, it is in service when it is ready and available for its specific use. Efile tax returns Example 1. Efile tax returns On November 22 of last year, you purchased a dishwasher for your rental property. Efile tax returns The appliance was delivered on December 7, but was not installed and ready for use until January 3 of this year. Efile tax returns Because the dishwasher was not ready for use last year, it is not considered placed in service until this year. Efile tax returns If the appliance had been installed and ready for use when it was delivered in December of last year, it would have been considered placed in service in December, even if it was not actually used until this year. Efile tax returns Example 2. Efile tax returns On April 6, you purchased a house to use as residential rental property. Efile tax returns You made extensive repairs to the house and had it ready for rent on July 5. Efile tax returns You began to advertise the house for rent in July and actually rented it beginning September 1. Efile tax returns The house is considered placed in service in July when it was ready and available for rent. Efile tax returns You can begin to depreciate the house in July. Efile tax returns Example 3. Efile tax returns You moved from your home in July. Efile tax returns During August and September you made several repairs to the house. Efile tax returns On October 1, you listed the property for rent with a real estate company, which rented it on December 1. Efile tax returns The property is considered placed in service on October 1, the date when it was available for rent. Efile tax returns Conversion to business use. Efile tax returns   If you place property in service in a personal activity, you cannot claim depreciation. Efile tax returns However, if you change the property's use to business or the production of income, you can begin to depreciate it at the time of the change. Efile tax returns You place the property in service for business or income-producing use on the date of the change. Efile tax returns Example. Efile tax returns You bought a house and used it as your personal home several years before you converted it to rental property. Efile tax returns Although its specific use was personal and no depreciation was allowable, you placed the home in service when you began using it as your home. Efile tax returns You can begin to claim depreciation in the year you converted it to rental property because at that time its use changed to the production of income. Efile tax returns Idle Property Continue to claim a deduction for depreciation on property used in your rental activity even if it is temporarily idle (not in use). Efile tax returns For example, if you must make repairs after a tenant moves out, you still depreciate the rental property during the time it is not available for rent. Efile tax returns Cost or Other Basis Fully Recovered You must stop depreciating property when the total of your yearly depreciation deductions equals your cost or other basis of your property. Efile tax returns For this purpose, your yearly depreciation deductions include any depreciation that you were allowed to claim, even if you did not claim it. Efile tax returns See Basis of Depreciable Property , later. Efile tax returns Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Efile tax returns You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Efile tax returns You sell or exchange the property. Efile tax returns You convert the property to personal use. Efile tax returns You abandon the property. Efile tax returns The property is destroyed. Efile tax returns Depreciation Methods Generally, you must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate residential rental property placed in service after 1986. Efile tax returns If you placed rental property in service before 1987, you are using one of the following methods. Efile tax returns ACRS (Accelerated Cost Recovery System) for property placed in service after 1980 but before 1987. Efile tax returns Straight line or declining balance method over the useful life of property placed in service before 1981. Efile tax returns See MACRS Depreciation , later, for more information. Efile tax returns Rental property placed in service before 2013. Efile tax returns   Continue to use the same method of figuring depreciation that you used in the past. Efile tax returns Use of real property changed. Efile tax returns   Generally, you must use MACRS to depreciate real property that you acquired for personal use before 1987 and changed to business or income-producing use after 1986. Efile tax returns This includes your residence that you changed to rental use. Efile tax returns See Property Owned or Used in 1986 in Publication 946, chapter 1, for those situations in which MACRS is not allowed. Efile tax returns Improvements made after 1986. Efile tax returns   Treat an improvement made after 1986 to property you placed in service before 1987 as separate depreciable property. Efile tax returns As a result, you can depreciate that improvement as separate property under MACRS if it is the type of property that otherwise qualifies for MACRS depreciation. Efile tax returns For more information about improvements, see Additions or improvements to property , later in this chapter under Recovery Periods Under GDS. Efile tax returns This publication discusses MACRS depreciation only. Efile tax returns If you need information about depreciating property placed in service before 1987, see Publication 534. Efile tax returns Basis of Depreciable Property The basis of property used in a rental activity is generally its adjusted basis when you place it in service in that activity. Efile tax returns This is its cost or other basis when you acquired it, adjusted for certain items occurring before you place it in service in the rental activity. Efile tax returns If you depreciate your property under MACRS, you may also have to reduce your basis by certain deductions and credits with respect to the property. Efile tax returns Basis and adjusted basis are explained in the following discussions. Efile tax returns If you used the property for personal purposes before changing it to rental use, its basis for depreciation is the lesser of its adjusted basis or its fair market value when you change it to rental use. Efile tax returns See Basis of Property Changed to Rental Use in chapter 4. Efile tax returns Cost Basis The basis of property you buy is usually its cost. Efile tax returns The cost is the amount you pay for it in cash, in debt obligation, in other property, or in services. Efile tax returns Your cost also includes amounts you pay for: Sales tax charged on the purchase (but see Exception next), Freight charges to obtain the property, and Installation and testing charges. Efile tax returns Exception. Efile tax returns   If you deducted state and local general sales taxes as an itemized deduction on Schedule A (Form 1040), do not include those sales taxes as part of your cost basis. Efile tax returns Such taxes were deductible before 1987 and after 2003. Efile tax returns Loans with low or no interest. Efile tax returns   If you buy property on any time-payment plan that charges little or no interest, the basis of your property is your stated purchase price, less the amount considered to be unstated interest. Efile tax returns See Unstated Interest and Original Issue Discount (OID) in Publication 537, Installment Sales. Efile tax returns Real property. Efile tax returns   If you buy real property, such as a building and land, certain fees and other expenses you pay are part of your cost basis in the property. Efile tax returns Real estate taxes. Efile tax returns   If you buy real property and agree to pay real estate taxes on it that were owed by the seller and the seller does not reimburse you, the taxes you pay are treated as part of your basis in the property. Efile tax returns You cannot deduct them as taxes paid. Efile tax returns   If you reimburse the seller for real estate taxes the seller paid for you, you can usually deduct that amount. Efile tax returns Do not include that amount in your basis in the property. Efile tax returns Settlement fees and other costs. Efile tax returns   The following settlement fees and closing costs for buying the property are part of your basis in the property. Efile tax returns Abstract fees. Efile tax returns Charges for installing utility services. Efile tax returns Legal fees. Efile tax returns Recording fees. Efile tax returns Surveys. Efile tax returns Transfer taxes. Efile tax returns Title insurance. Efile tax returns Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Efile tax returns   The following are settlement fees and closing costs you cannot include in your basis in the property. Efile tax returns Fire insurance premiums. Efile tax returns Rent or other charges relating to occupancy of the property before closing. Efile tax returns Charges connected with getting or refinancing a loan, such as: Points (discount points, loan origination fees), Mortgage insurance premiums, Loan assumption fees, Cost of a credit report, and Fees for an appraisal required by a lender. Efile tax returns   Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Efile tax returns Assumption of a mortgage. Efile tax returns   If you buy property and become liable for an existing mortgage on the property, your basis is the amount you pay for the property plus the amount remaining to be paid on the mortgage. Efile tax returns Example. Efile tax returns You buy a building for $60,000 cash and assume a mortgage of $240,000 on it. Efile tax returns Your basis is $300,000. Efile tax returns Separating cost of land and buildings. Efile tax returns   If you buy buildings and your cost includes the cost of the land on which they stand, you must divide the cost between the land and the buildings to figure the basis for depreciation of the buildings. Efile tax returns The part of the cost that you allocate to each asset is the ratio of the fair market value of that asset to the fair market value of the whole property at the time you buy it. Efile tax returns   If you are not certain of the fair market values of the land and the buildings, you can divide the cost between them based on their assessed values for real estate tax purposes. Efile tax returns Example. Efile tax returns You buy a house and land for $200,000. Efile tax returns The purchase contract does not specify how much of the purchase price is for the house and how much is for the land. Efile tax returns The latest real estate tax assessment on the property was based on an assessed value of $160,000, of which $136,000 was for the house and $24,000 was for the land. Efile tax returns You can allocate 85% ($136,000 ÷ $160,000) of the purchase price to the house and 15% ($24,000 ÷ $160,000) of the purchase price to the land. Efile tax returns Your basis in the house is $170,000 (85% of $200,000) and your basis in the land is $30,000 (15% of $200,000). Efile tax returns Basis Other Than Cost You cannot use cost as a basis for property that you received: In return for services you performed; In an exchange for other property; As a gift; From your spouse, or from your former spouse as the result of a divorce; or As an inheritance. Efile tax returns If you received property in one of these ways, see Publication 551 for information on how to figure your basis. Efile tax returns Adjusted Basis To figure your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the production of income. Efile tax returns The result of these adjustments to the basis is the adjusted basis. Efile tax returns Increases to basis. Efile tax returns   You must increase the basis of any property by the cost of all items properly added to a capital account. Efile tax returns These include the following. Efile tax returns The cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year. Efile tax returns Amounts spent after a casualty to restore the damaged property. Efile tax returns The cost of extending utility service lines to the property. Efile tax returns Legal fees, such as the cost of defending and perfecting title, or settling zoning issues. Efile tax returns Additions or improvements. Efile tax returns   Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. Efile tax returns This includes all direct costs, such as material and labor, but does not include your own labor. Efile tax returns It also includes all expenses related to the addition or improvement. Efile tax returns   For example, if you had an architect draw up plans for remodeling your property, the architect's fee is a part of the cost of the remodeling. Efile tax returns Or, if you had your lot surveyed to put up a fence, the cost of the survey is a part of the cost of the fence. Efile tax returns   Keep separate accounts for depreciable additions or improvements made after you place the property in service in your rental activity. Efile tax returns For information on depreciating additions or improvements, see Additions or improvements to property , later in this chapter, under Recovery Periods Under GDS. Efile tax returns    The cost of landscaping improvements is usually treated as an addition to the basis of the land, which is not depreciable. Efile tax returns However, see What Rental Property Cannot Be Depreciated, earlier. Efile tax returns Assessments for local improvements. Efile tax returns   Assessments for items which tend to increase the value of property, such as streets and sidewalks, must be added to the basis of the property. Efile tax returns For example, if your city installs curbing on the street in front of your house, and assesses you and your neighbors for its cost, you must add the assessment to the basis of your property. Efile tax returns Also add the cost of legal fees paid to obtain a decrease in an assessment levied against property to pay for local improvements. Efile tax returns You cannot deduct these items as taxes or depreciate them. Efile tax returns    However, you can deduct as taxes, charges or assessments for maintenance, repairs, or interest charges related to the improvements. Efile tax returns Do not add them to your basis in the property. Efile tax returns Deducting vs. Efile tax returns capitalizing costs. Efile tax returns   Do not add to your basis costs you can deduct as current expenses. Efile tax returns However, there are certain costs you can choose either to deduct or to capitalize. Efile tax returns If you capitalize these costs, include them in your basis. Efile tax returns If you deduct them, do not include them in your basis. Efile tax returns   The costs you may choose to deduct or capitalize include carrying charges, such as interest and taxes, that you must pay to own property. Efile tax returns   For more information about deducting or capitalizing costs and how to make the election, see Carrying Charges in Publication 535, chapter 7. Efile tax returns Decreases to basis. Efile tax returns   You must decrease the basis of your property by any items that represent a return of your cost. Efile tax returns These include the following. Efile tax returns Insurance or other payment you receive as the result of a casualty or theft loss. Efile tax returns Casualty loss not covered by insurance for which you took a deduction. Efile tax returns Amount(s) you receive for granting an easement. Efile tax returns Residential energy credits you were allowed before 1986, or after 2005, if you added the cost of the energy items to the basis of your home. Efile tax returns Exclusion from income of subsidies for energy conservation measures. Efile tax returns Special depreciation allowance claimed on qualified property. Efile tax returns Depreciation you deducted, or could have deducted, on your tax returns under the method of depreciation you chose. Efile tax returns If you did not deduct enough or deducted too much in any year, see Depreciation under Decreases to Basis in Publication 551. Efile tax returns   If your rental property was previously used as your main home, you must also decrease the basis by the following. Efile tax returns Gain you postponed from the sale of your main home before May 7, 1997, if the replacement home was converted to your rental property. Efile tax returns District of Columbia first-time homebuyer credit allowed on the purchase of your main home after August 4, 1997 and before January 1, 2012. Efile tax returns Amount of qualified principal residence indebtedness discharged on or after January 1, 2007. Efile tax returns Claiming the Special Depreciation Allowance For 2013, your residential rental property may qualify for a special depreciation allowance. Efile tax returns This allowance is figured before you figure your regular depreciation deduction. Efile tax returns See Publication 946, chapter 3, for details. Efile tax returns Also see the Instructions for Form 4562, Line 14. Efile tax returns If you qualify for, but choose not to take, a special depreciation allowance, you must attach a statement to your return. Efile tax returns The details of this election are in Publication 946, chapter 3, and the Instructions for Form 4562, Line 14. Efile tax returns MACRS Depreciation Most business and investment property placed in service after 1986 is depreciated using MACRS. Efile tax returns This section explains how to determine which MACRS depreciation system applies to your property. Efile tax returns It also discusses other information you need to know before you can figure depreciation under MACRS. Efile tax returns This information includes the property's: Recovery class, Applicable recovery period, Convention, Placed-in-service date, Basis for depreciation, and Depreciation method. Efile tax returns Depreciation Systems MACRS consists of two systems that determine how you depreciate your property—the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Efile tax returns You must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Efile tax returns Excluded Property You cannot use MACRS for certain personal property (such as furniture or appliances) placed in service in your rental property in 2013 if it had been previously placed in service before 1987 when MACRS became effective. Efile tax returns In most cases, personal property is excluded from MACRS if you (or a person related to you) owned or used it in 1986 or if your tenant is a person (or someone related to the person) who owned or used it in 1986. Efile tax returns However, the property is not excluded if your 2013 deduction under MACRS (using a half-year convention) is less than the deduction you would have under ACRS. Efile tax returns For more information, see What Method Can You Use To Depreciate Your Property? in Publication 946, chapter 1. Efile tax returns Electing ADS If you choose, you can use the ADS method for most property. Efile tax returns Under ADS, you use the straight line method of depreciation. Efile tax returns The election of ADS for one item in a class of property generally applies to all property in that class that is placed in service during the tax year of the election. Efile tax returns However, the election applies on a property-by-property basis for residential rental property and nonresidential real property. Efile tax returns If you choose to use ADS for your residential rental property, the election must be made in the first year the property is placed in service. Efile tax returns Once you make this election, you can never revoke it. Efile tax returns For property placed in service during 2013, you make the election to use ADS by entering the depreciation on Form 4562, Part III, Section C, line 20c. Efile tax returns Property Classes Under GDS Each item of property that can be depreciated under MACRS is assigned to a property class, determined by its class life. Efile tax returns The property class generally determines the depreciation method, recovery period, and convention. Efile tax returns The property classes under GDS are: 3-year property, 5-year property, 7-year property, 10-year property, 15-year property, 20-year property, Nonresidential real property, and Residential rental property. Efile tax returns Under MACRS, property that you placed in service during 2013 in your rental activities generally falls into one of the following classes. Efile tax returns 5-year property. Efile tax returns This class includes computers and peripheral equipment, office machinery (typewriters, calculators, copiers, etc. Efile tax returns ), automobiles, and light trucks. Efile tax returns This class also includes appliances, carpeting, furniture, etc. Efile tax returns , used in a residential rental real estate activity. Efile tax returns Depreciation on automobiles, other property used for transportation, computers and related peripheral equipment, and property of a type generally used for entertainment, recreation, or amusement is limited. Efile tax returns See chapter 5 of Publication 946. Efile tax returns 7-year property. Efile tax returns This class includes office furniture and equipment (desks, file cabinets, etc. Efile tax returns ). Efile tax returns This class also includes any property that does not have a class life and that has not been designated by law as being in any other class. Efile tax returns 15-year property. Efile tax returns This class includes roads, fences, and shrubbery (if depreciable). Efile tax returns Residential rental property. Efile tax returns This class includes any real property that is a rental building or structure (including a mobile home) for which 80% or more of the gross rental income for the tax year is from dwelling units. Efile tax returns It does not include a unit in a hotel, motel, inn, or other establishment where more than half of the units are used on a transient basis. Efile tax returns If you live in any part of the building or structure, the gross rental income includes the fair rental value of the part you live in. Efile tax returns The other property classes do not generally apply to property used in rental activities. Efile tax returns These classes are not discussed in this publication. Efile tax returns See Publication 946 for more information. Efile tax returns Recovery Periods Under GDS The recovery period of property is the number of years over which you recover its cost or other basis. Efile tax returns The recovery periods are generally longer under ADS than GDS. Efile tax returns The recovery period of property depends on its property class. Efile tax returns Under GDS, the recovery period of an asset is generally the same as its property class. Efile tax returns Class lives and recovery periods for most assets are listed in Appendix B of Publication 946. Efile tax returns See Table 2-1 for recovery periods of property commonly used in residential rental activities. Efile tax returns Qualified Indian reservation property. Efile tax returns   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations. Efile tax returns For more information, see chapter 4 of Publication 946. Efile tax returns Additions or improvements to property. Efile tax returns   Treat additions or improvements you make to your depreciable rental property as separate property items for depreciation purposes. Efile tax returns   The property class and recovery period of the addition or improvement is the one that would apply to the original property if you had placed it in service at the same time as the addition or improvement. Efile tax returns   The recovery period for an addition or improvement to property begins on the later of: The date the addition or improvement is placed in service, or The date the property to which the addition or improvement was made is placed in service. Efile tax returns Example. Efile tax returns You own a residential rental house that you have been renting since 1986 and depreciating under ACRS. Efile tax returns You built an addition onto the house and placed it in service in 2013. Efile tax returns You must use MACRS for the addition. Efile tax returns Under GDS, the addition is depreciated as residential rental property over 27. Efile tax returns 5 years. Efile tax returns Table 2-1. Efile tax returns MACRS Recovery Periods for Property Used in Rental Activities   MACRS Recovery Period   Type of Property General Depreciation System Alternative Depreciation System   Computers and their peripheral equipment 5 years 5 years   Office machinery, such as: Typewriters Calculators Copiers 5 years 6 years   Automobiles 5 years 5 years   Light trucks 5 years 5 years   Appliances, such as: Stoves Refrigerators 5 years 9 years   Carpets 5 years 9 years   Furniture used in rental property 5 years 9 years   Office furniture and equipment, such as: Desks Files 7 years 10 years   Any property that does not have a class life and that has not been designated by law as being in any other class 7 years 12 years   Roads 15 years 20 years   Shrubbery 15 years 20 years   Fences 15 years 20 years   Residential rental property (buildings or structures) and structural components such as furnaces, waterpipes, venting, etc. Efile tax returns 27. Efile tax returns 5 years 40 years   Additions and improvements, such as a new roof The same recovery period as that of the property to which the addition or improvement is made, determined as if the property were placed in service at the same time as the addition or improvement. Efile tax returns   Conventions A convention is a method established under MACRS to set the beginning and end of the recovery period. Efile tax returns The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Efile tax returns Mid-month convention. Efile tax returns    A mid-month convention is used for all residential rental property and nonresidential real property. Efile tax returns Under this convention, you treat all property placed in service, or disposed of, during any month as placed in service, or disposed of, at the midpoint of that month. Efile tax returns Mid-quarter convention. Efile tax returns   A mid-quarter convention must be used if the mid-month convention does not apply and the total depreciable basis of MACRS property placed in service in the last 3 months of a tax year (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) is more than 40% of the total basis of all such property you place in service during the year. Efile tax returns   Under this convention, you treat all property placed in service, or disposed of, during any quarter of a tax year as placed in service, or disposed of, at the midpoint of the quarter. Efile tax returns Example. Efile tax returns During the tax year, Tom Martin purchased the following items to use in his rental property. Efile tax returns He elects not to claim the special depreciation allowance discussed earlier. Efile tax returns A dishwasher for $400 that he placed in service in January. Efile tax returns Used furniture for $100 that he placed in service in September. Efile tax returns A refrigerator for $800 that he placed in service in October. Efile tax returns Tom uses the calendar year as his tax year. Efile tax returns The total basis of all property placed in service that year is $1,300. Efile tax returns The $800 basis of the refrigerator placed in service during the last 3 months of his tax year exceeds $520 (40% × $1,300). Efile tax returns Tom must use the mid-quarter convention instead of the half-year convention for all three items. Efile tax returns Half-year convention. Efile tax returns    The half-year convention is used if neither the mid-quarter convention nor the mid-month convention applies. Efile tax returns Under this convention, you treat all property placed in service, or disposed of, during a tax year as placed in service, or disposed of, at the midpoint of that tax year. Efile tax returns   If this convention applies, you deduct a half year of depreciation for the first year and the last year that you depreciate the property. Efile tax returns You deduct a full year of depreciation for any other year during the recovery period. Efile tax returns Figuring Your Depreciation Deduction You can figure your MACRS depreciation deduction in one of two ways. Efile tax returns The deduction is substantially the same both ways. Efile tax returns You can either: Actually compute the deduction using the depreciation method and convention that apply over the recovery period of the property, or Use the percentage from the MACRS percentage tables. Efile tax returns In this publication we will use the percentage tables. Efile tax returns For instructions on how to compute the deduction, see chapter 4 of Publication 946. Efile tax returns Residential rental property. Efile tax returns   You must use the straight line method and a mid-month convention for residential rental property. Efile tax returns In the first year that you claim depreciation for residential rental property, you can claim depreciation only for the number of months the property is in use, and you must use the mid-month convention (explained under Conventions , earlier). Efile tax returns 5-, 7-, or 15-year property. Efile tax returns   For property in the 5- or 7-year class, use the 200% declining balance method and a half-year convention. Efile tax returns However, in limited cases you must use the mid-quarter convention, if it applies. Efile tax returns For property in the 15-year class, use the 150% declining balance method and a half-year convention. Efile tax returns   You can also choose to use the 150% declining balance method for property in the 5- or 7-year class. Efile tax returns The choice to use the 150% method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Efile tax returns You make this election on Form 4562. Efile tax returns In Part III, column (f), enter “150 DB. Efile tax returns ” Once you make this election, you cannot change to another method. Efile tax returns   If you use either the 200% or 150% declining balance method, you figure your deduction using the straight line method in the first tax year that the straight line method gives you an equal or larger deduction. Efile tax returns   You can also choose to use the straight line method with a half-year or mid-quarter convention for 5-, 7-, or 15-year property. Efile tax returns The choice to use the straight line method for one item in a class of property applies to all property in that class that is placed in service during the tax year of the election. Efile tax returns You elect the straight line method on Form 4562. Efile tax returns In Part III, column (f), enter “S/L. Efile tax returns ” Once you make this election, you cannot change to another method. Efile tax returns MACRS Percentage Tables You can use the percentages in Table 2-2, earlier, to compute annual depreciation under MACRS. Efile tax returns The tables show the percentages for the first few years or until the change to the straight line method is made. Efile tax returns See Appendix A of Publication 946 for complete tables. Efile tax returns The percentages in Tables 2-2a, 2-2b, and 2-2c make the change from declining balance to straight line in the year that straight line will give a larger deduction. Efile tax returns If you elect to use the straight line method for 5-, 7-, or 15-year property, or the 150% declining balance method for 5- or 7-year property, use the tables in Appendix A of Publication 946. Efile tax returns How to use the percentage tables. Efile tax returns   You must apply the table rates to your property's unadjusted basis (defined below) each year of the recovery period. Efile tax returns   Once you begin using a percentage table to figure depreciation, you must continue to use it for the entire recovery period unless there is an adjustment to the basis of your property for a reason other than: Depreciation allowed or allowable, or An addition or improvement that is depreciated as a separate item of property. Efile tax returns   If there is an adjustment for any reason other than (1) or (2), for example, because of a deductible casualty loss, you can no longer use the table. Efile tax returns For the year of the adjustment and for the remaining recovery period, figure depreciation using the property's adjusted basis at the end of the year and the appropriate depreciation method, as explained earlier under Figuring Your Depreciation Deduction . Efile tax returns See Figuring the Deduction Without Using the Tables in Publication 946, chapter 4. Efile tax returns Unadjusted basis. Efile tax returns   This is the same basis you would use to figure gain on a sale (see Basis of Depreciable Property , earlier), but without reducing your original basis by any MACRS depreciation taken in earlier years. Efile tax returns   However, you do reduce your original basis by other amounts claimed on the property, including: Any amortization, Any section 179 deduction, and Any special depreciation allowance. Efile tax returns For more information, see chapter 4 of Publication 946. Efile tax returns Please click here for the text description of the image. Efile tax returns Table 2-2 Tables 2-2a, 2-2b, and 2-2c. Efile tax returns   The percentages in these tables take into account the half-year and mid-quarter conventions. Efile tax returns Use Table 2-2a for 5-year property, Table 2-2b for 7-year property, and Table 2-2c for 15-year property. Efile tax returns Use the percentage in the second column (half-year convention) unless you are required to use the mid-quarter convention (explained earlier). Efile tax returns If you must use the mid-quarter convention, use the column that corresponds to the calendar year quarter in which you placed the property in service. Efile tax returns Example 1. Efile tax returns You purchased a stove and refrigerator and placed them in service in June. Efile tax returns Your basis in the stove is $600 and your basis in the refrigerator is $1,000. Efile tax returns Both are 5-year property. Efile tax returns Using the half-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. Efile tax returns For that year your depreciation deduction is $120 ($600 × . Efile tax returns 20) for the stove and $200 ($1,000 × . Efile tax returns 20) for the refrigerator. Efile tax returns For Year 2, the depreciation percentage is 32%. Efile tax returns That year's depreciation deduction will be $192 ($600 × . Efile tax returns 32) for the stove and $320 ($1,000 × . Efile tax returns 32) for the refrigerator. Efile tax returns Example 2. Efile tax returns Assume the same facts as in Example 1, except you buy the refrigerator in October instead of June. Efile tax returns Since the refrigerator was placed in service in the last 3 months of the tax year, and its basis ($1,000) is more than 40% of the total basis of all property placed in service during the year ($1,600 × . Efile tax returns 40 = $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. Efile tax returns Because you placed the refrigerator in service in October, you use the fourth quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 5%. Efile tax returns Your depreciation deduction for the refrigerator is $50 ($1,000 x . Efile tax returns 05). Efile tax returns Because you placed the stove in service in June, you use the second quarter column of Table 2-2a and find the depreciation percentage for Year 1 is 25%. Efile tax returns For that year, your depreciation deduction for the stove is $150 ($600 x . Efile tax returns 25). Efile tax returns Table 2-2d. Efile tax returns    Use this table when you are using the GDS 27. Efile tax returns 5 year option for residential rental property. Efile tax returns Find the row for the month that you placed the property in service. Efile tax returns Use the percentages listed for that month to figure your depreciation deduction. Efile tax returns The mid-month convention is taken into account in the percentages shown in the table. Efile tax returns Continue to use the same row (month) under the column for the appropriate year. Efile tax returns Example. Efile tax returns You purchased a single family rental house for $185,000 and placed it in service on February 8. Efile tax returns The sales contract showed that the building cost $160,000 and the land cost $25,000. Efile tax returns Your basis for depreciation is its original cost, $160,000. Efile tax returns This is the first year of service for your residential rental property and you decide to use GDS which has a recovery period of 27. Efile tax returns 5 years. Efile tax returns Using Table 2-2d, you find that the percentage for property placed in service in February of Year 1 is 3. Efile tax returns 182%. Efile tax returns That year's depreciation deduction is $5,091 ($160,000 x . Efile tax returns 03182). Efile tax returns Figuring MACRS Depreciation Under ADS Table 2–1, earlier, shows the ADS recovery periods for property used in rental activities. Efile tax returns See Appendix B in Publication 946 for other property. Efile tax returns If your property is not listed in Appendix B, it is considered to have no class life. Efile tax returns Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. Efile tax returns Use the mid-month convention for residential rental property and nonresidential real property. Efile tax returns For all other property, use the half-year or mid-quarter convention, as appropriate. Efile tax returns See Publication 946 for ADS depreciation tables. Efile tax returns Claiming the Correct Amount of Depreciation You should claim the correct amount of depreciation each tax year. Efile tax returns If you did not claim all the depreciation you were entitled to deduct, you must still reduce your basis in the property by the full amount of depreciation that you could have deducted. Efile tax returns For more information, see Depreciation under Decreases to Basis in Publication 551. Efile tax returns If you deducted an incorrect amount of depreciation for property in any year, you may be able to make a correction by filing Form 1040X, Amended U. Efile tax returns S. Efile tax returns Individual Income Tax Return. Efile tax returns If you are not allowed to make the correction on an amended return, you can change your accounting method to claim the correct amount of depreciation. Efile tax returns Filing an amended return. Efile tax returns   You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Efile tax returns You claimed the incorrect amount because of a mathematical error made in any year. Efile tax returns You claimed the incorrect amount because of a posting error made in any year. Efile tax returns You have not adopted a method of accounting for property placed in service by you in tax years ending after December 29, 2003. Efile tax returns You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Efile tax returns   Generally, you adopt a method of accounting for depreciation by using a permissible method of determining depreciation when you file your first tax return for the property used in your rental activity. Efile tax returns This also occurs when you use the same impermissible method of determining depreciation (for example, using the wrong MACRS recovery period) in two or more consecutively filed tax returns. Efile tax returns   If an amended return is allowed, you must file it by the later of the following dates. Efile tax returns 3 years from the date you filed your original return for the year in which you did not deduct the correct amount. Efile tax returns A return filed before an unextended due date is considered filed on that due date. Efile tax returns 2 years from the time you paid your tax for that year. Efile tax returns Changing your accounting method. Efile tax returns   To change your accounting method, you generally must file Form 3115, Application for Change in Accounting Method, to get the consent of the IRS. Efile tax returns In some instances, that consent is automatic. Efile tax returns For more information, see Changing Your Accounting Method in Publication 946,  chapter 1. Efile tax returns Prev  Up  Next   Home   More Online Publications
Español

Appalachian Regional Commission

The Appalachian Regional Commission works for sustainable community and economic development in Appalachia.

Contact the Agency or Department

Website: Appalachian Regional Commission

E-mail:

Address: 1666 Connecticut Avenue, NW
Suite 700

Washington, DC 20009-1068

Phone Number: (202) 884-7700

The Efile Tax Returns

Efile tax returns Internal Revenue Bulletin:  2013-12  March 18, 2013  Rev. Efile tax returns Proc. Efile tax returns 2013-21 Table of Contents SECTION 1. Efile tax returns PURPOSE SECTION 2. Efile tax returns BACKGROUND SECTION 3. Efile tax returns SCOPE SECTION 4. Efile tax returns APPLICATION. Efile tax returns 01 Limitations on Depreciation Deductions for Certain Automobiles. Efile tax returns . Efile tax returns 02 Inclusions in Income of Lessees of Passenger Automobiles. Efile tax returns SECTION 5. Efile tax returns EFFECTIVE DATE SECTION 6. Efile tax returns DRAFTING INFORMATION SECTION 1. Efile tax returns PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2013, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2013, including a separate table of inclusion amounts for lessees of trucks and vans. Efile tax returns The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Efile tax returns SECTION 2. Efile tax returns BACKGROUND . Efile tax returns 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Efile tax returns For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Efile tax returns The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Efile tax returns This change reflects the higher rate of price inflation for trucks and vans since 1988. Efile tax returns . Efile tax returns 02 Section 331(a) of the American Taxpayer Relief Act of 2012, Pub. Efile tax returns L. Efile tax returns No. Efile tax returns 112-240, 126 Stat. Efile tax returns 2313 (Jan. Efile tax returns 2, 2013) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2014, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2014. Efile tax returns Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Efile tax returns . Efile tax returns 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Efile tax returns Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Efile tax returns Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2012, that is round 3 extension property (as defined in § 168(k)(4)(J)(iv)). Efile tax returns Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Efile tax returns This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer: (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2013 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Efile tax returns . Efile tax returns 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Efile tax returns The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Efile tax returns Under § 1. Efile tax returns 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Efile tax returns One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Efile tax returns Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Efile tax returns SECTION 3. Efile tax returns SCOPE . Efile tax returns 01 The limitations on depreciation deductions in section 4. Efile tax returns 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2013, and continue to apply for each taxable year that the passenger automobile remains in service. Efile tax returns . Efile tax returns 02 The tables in section 4. Efile tax returns 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2013. Efile tax returns Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Efile tax returns See Rev. Efile tax returns Proc. Efile tax returns 2008-22, 2008-1 C. Efile tax returns B. Efile tax returns 658, for passenger automobiles first leased during calendar year 2008; Rev. Efile tax returns Proc. Efile tax returns 2009-24, 2009-17 I. Efile tax returns R. Efile tax returns B. Efile tax returns 885, for passenger automobiles first leased during calendar year 2009; Rev. Efile tax returns Proc. Efile tax returns 2010-18, 2010-09 I. Efile tax returns R. Efile tax returns B. Efile tax returns 427, as amplified and modified by section 4. Efile tax returns 03 of Rev. Efile tax returns Proc. Efile tax returns 2011-21, 2011-12 I. Efile tax returns R. Efile tax returns B. Efile tax returns 560, for passenger automobiles first leased during calendar year 2010; Rev. Efile tax returns Proc. Efile tax returns 2011-21, for passenger automobiles first leased during calendar year 2011; and Rev. Efile tax returns Proc. Efile tax returns 2012-23, 2012-14 I. Efile tax returns R. Efile tax returns B. Efile tax returns 712, for passenger automobiles first leased during calendar year 2012. Efile tax returns SECTION 4. Efile tax returns APPLICATION . Efile tax returns 01 Limitations on Depreciation Deductions for Certain Automobiles. Efile tax returns (1) Amount of the inflation adjustment. Efile tax returns (a) Passenger automobiles (other than trucks or vans). Efile tax returns Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Efile tax returns Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Efile tax returns The new car component of the CPI was 115. Efile tax returns 2 for October 1987 and 143. Efile tax returns 787 for October 2012. Efile tax returns The October 2012 index exceeded the October 1987 index by 28. Efile tax returns 587. Efile tax returns Therefore, the automobile price inflation adjustment for 2013 for passenger automobiles (other than trucks and vans) is 24. Efile tax returns 8 percent (28. Efile tax returns 587/115. Efile tax returns 2 x 100%). Efile tax returns The dollar limitations in § 280F(a) are multiplied by a factor of 0. Efile tax returns 248, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2013. Efile tax returns This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2013. Efile tax returns (b) Trucks and vans. Efile tax returns To determine the dollar limitations for trucks and vans first placed in service during calendar year 2013, the Service uses the new truck component of the CPI instead of the new car component. Efile tax returns The new truck component of the CPI was 112. Efile tax returns 4 for October 1987 and 149. Efile tax returns 386 for October 2012. Efile tax returns The October 2012 index exceeded the October 1987 index by 36. Efile tax returns 986. Efile tax returns Therefore, the automobile price inflation adjustment for 2013 for trucks and vans is 32. Efile tax returns 9 percent (36. Efile tax returns 986/112. Efile tax returns 4 x 100%). Efile tax returns The dollar limitations in § 280F(a) are multiplied by a factor of 0. Efile tax returns 329, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Efile tax returns This adjustment applies to all trucks and vans that are first placed in service in calendar year 2013. Efile tax returns (2) Amount of the limitation. Efile tax returns Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2013. Efile tax returns Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction applies. Efile tax returns Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2013 for which the § 168(k) additional first year depreciation deduction does not apply. Efile tax returns REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2013 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,400 3rd Tax Year $3,250 Each Succeeding Year $1,975 . Efile tax returns 02 Inclusions in Income of Lessees of Passenger Automobiles. Efile tax returns A taxpayer must follow the procedures in § 1. Efile tax returns 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2013. Efile tax returns In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Efile tax returns REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 2 4 6 7 8 19,500 20,000 2 5 6 9 9 20,000 20,500 2 5 8 9 11 20,500 21,000 3 6 8 10 12 21,000 21,500 3 6 10 11 13 21,500 22,000 3 7 10 13 14 22,000 23,000 4 8 11 14 16 23,000 24,000 4 9 14 16 18 24,000 25,000 5 10 15 18 21 25,000 26,000 5 12 16 21 23 26,000 27,000 6 12 19 23 25 27,000 28,000 6 14 20 25 28 28,000 29,000 7 15 22 27 30 29,000 30,000 7 16 24 29 33 30,000 31,000 8 17 26 31 35 31,000 32,000 8 19 27 33 38 32,000 33,000 9 20 29 35 40 33,000 34,000 10 21 31 37 43 34,000 35,000 10 22 33 39 45 35,000 36,000 11 23 35 41 48 36,000 37,000 11 25 36 43 50 37,000 38,000 12 26 38 45 53 38,000 39,000 12 27 40 47 55 39,000 40,000 13 28 42 49 58 40,000 41,000 13 29 44 52 59 41,000 42,000 14 30 45 54 63 42,000 43,000 14 32 47 56 64 43,000 44,000 15 33 48 59 67 44,000 45,000 15 34 51 60 69 45,000 46,000 16 35 52 63 72 46,000 47,000 17 36 54 65 74 47,000 48,000 17 38 55 67 77 48,000 49,000 18 39 57 69 79 49,000 50,000 18 40 59 71 82 50,000 51,000 19 41 61 73 84 51,000 52,000 19 42 63 75 87 52,000 53,000 20 43 65 77 89 53,000 54,000 20 45 66 79 92 54,000 55,000 21 46 68 81 94 55,000 56,000 21 47 70 84 96 56,000 57,000 22 48 72 85 99 57,000 58,000 22 50 73 88 101 58,000 59,000 23 51 75 90 103 59,000 60,000 24 52 76 92 106 60,000 62,000 24 54 79 95 110 62,000 64,000 25 56 83 99 115 64,000 66,000 27 58 87 103 120 66,000 68,000 28 60 90 108 125 68,000 70,000 29 63 93 112 130 70,000 72,000 30 65 97 117 134 72,000 74,000 31 68 100 121 139 74,000 76,000 32 70 104 125 144 76,000 78,000 33 73 107 129 149 78,000 80,000 34 75 111 133 154 80,000 85,000 36 79 117 141 162 85,000 90,000 39 85 126 151 174 90,000 95,000 41 91 135 162 186 95,000 100,000 44 97 144 172 199 100,000 110,000 48 106 157 188 217 110,000 120,000 53 118 174 210 241 120,000 130,000 59 129 193 230 266 130,000 140,000 64 141 210 252 290 140,000 150,000 70 153 227 273 315 150,000 160,000 75 165 245 294 339 160,000 170,000 80 177 263 315 363 170,000 180,000 86 189 280 336 388 180,000 190,000 91 201 298 357 412 190,000 200,000 97 212 316 378 436 200,000 210,000 102 224 333 400 461 210,000 220,000 107 236 351 420 486 220,000 230,000 113 248 368 442 509 230,000 240,000 118 260 386 463 534 240,000 And up 124 272 403 484 558 REV. Efile tax returns PROC. Efile tax returns 2013-21 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2013 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & later $19,000 $19,500 1 3 4 5 6 19,500 20,000 2 3 5 6 7 20,000 20,500 2 4 6 7 8 20,500 21,000 2 5 7 8 9 21,000 21,500 2 5 8 9 11 21,500 22,000 3 6 8 10 12 22,000 23,000 3 7 10 11 14 23,000 24,000 4 8 11 14 16 24,000 25,000 4 9 14 16 18 25,000 26,000 5 10 15 18 21 26,000 27,000 5 12 17 20 23 27,000 28,000 6 13 18 23 25 28,000 29,000 6 14 20 25 28 29,000 30,000 7 15 22 27 30 30,000 31,000 7 16 24 29 33 31,000 32,000 8 17 26 31 35 32,000 33,000 8 19 27 33 38 33,000 34,000 9 20 29 35 41 34,000 35,000 10 21 31 37 43 35,000 36,000 10 22 33 39 46 36,000 37,000 11 23 35 41 48 37,000 38,000 11 25 36 43 51 38,000 39,000 12 26 38 45 53 39,000 40,000 12 27 40 48 55 40,000 41,000 13 28 42 49 58 41,000 42,000 13 29 44 52 60 42,000 43,000 14 30 46 54 62 43,000 44,000 14 32 47 56 65 44,000 45,000 15 33 48 59 67 45,000 46,000 15 34 51 60 70 46,000 47,000 16 35 52 63 72 47,000 48,000 17 36 54 65 74 48,000 49,000 17 38 55 67 77 49,000 50,000 18 39 57 69 79 50,000 51,000 18 40 59 71 82 51,000 52,000 19 41 61 73 84 52,000 53,000 19 42 63 75 87 53,000 54,000 20 43 65 77 89 54,000 55,000 20 45 66 80 91 55,000 56,000 21 46 68 81 94 56,000 57,000 21 47 70 84 96 57,000 58,000 22 48 72 86 98 58,000 59,000 22 50 73 88 101 59,000 60,000 23 51 75 90 103 60,000 62,000 24 52 78 93 108 62,000 64,000 25 55 81 97 113 64,000 66,000 26 57 85 101 118 66,000 68,000 27 60 88 106 122 68,000 70,000 28 62 92 110 127 70,000 72,000 29 64 96 114 132 72,000 74,000 30 67 99 118 137 74,000 76,000 31 69 103 122 142 76,000 78,000 32 72 105 127 147 78,000 80,000 34 73 110 131 151 80,000 85,000 35 78 116 138 160 85,000 90,000 38 84 124 149 172 90,000 95,000 41 90 133 160 184 95,000 100,000 44 95 142 171 196 100,000 110,000 48 104 156 186 214 110,000 120,000 53 116 173 207 240 120,000 130,000 58 128 191 228 264 130,000 140,000 64 140 208 249 288 140,000 150,000 69 152 226 270 313 150,000 160,000 75 164 243 292 336 160,000 170,000 80 176 261 312 361 170,000 180,000 85 188 278 334 386 180,000 190,000 91 199 296 355 410 190,000 200,000 96 211 314 376 434 200,000 210,000 101 223 332 397 459 210,000 220,000 107 235 349 418 483 220,000 230,000 112 247 367 439 507 230,000 240,000 118 259 384 460 532 240,000 And up 123 271 401 482 556 SECTION 5. Efile tax returns EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2013. Efile tax returns SECTION 6. Efile tax returns DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Efile tax returns Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Efile tax returns For further information regarding this revenue procedure, contact Mr. Efile tax returns Harvey at (202) 622-4930 (not a toll-free call). Efile tax returns Prev  Up  Next   Home   More Internal Revenue Bulletins