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File State Income Tax Only

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File State Income Tax Only

File state income tax only Internal Revenue Bulletin:  2012-14  April 2, 2012  Rev. File state income tax only Proc. File state income tax only 2012-23 Table of Contents SECTION 1. File state income tax only PURPOSE SECTION 2. File state income tax only BACKGROUND SECTION 3. File state income tax only SCOPE SECTION 4. File state income tax only APPLICATION. File state income tax only 01 Limitations on Depreciation Deductions for Certain Automobiles. File state income tax only . File state income tax only 02 Inclusions in Income of Lessees of Passenger Automobiles. File state income tax only SECTION 5. File state income tax only EFFECTIVE DATE SECTION 6. File state income tax only DRAFTING INFORMATION SECTION 1. File state income tax only 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 2012, 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 2012, including a separate table of inclusion amounts for lessees of trucks and vans. File state income tax only 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. File state income tax only SECTION 2. File state income tax only BACKGROUND . File state income tax only 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. File state income tax only 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. File state income tax only 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. File state income tax only This change reflects the higher rate of price inflation for trucks and vans since 1988. File state income tax only . File state income tax only 02 Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. File state income tax only L. File state income tax only No. File state income tax only 111-312, 124 Stat. File state income tax only 3296 (Dec. File state income tax only 17, 2010) (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, 2013, 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, 2013. File state income tax only 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. File state income tax only . File state income tax only 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). File state income tax only 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. File state income tax only 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, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv)). File state income tax only Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. File state income tax only 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 2012 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. File state income tax only . File state income tax only 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. File state income tax only The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. File state income tax only Under § 1. File state income tax only 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. File state income tax only One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. File state income tax only Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. File state income tax only SECTION 3. File state income tax only SCOPE . File state income tax only 01 The limitations on depreciation deductions in section 4. File state income tax only 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 2012, and continue to apply for each taxable year that the passenger automobile remains in service. File state income tax only . File state income tax only 02 The tables in section 4. File state income tax only 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2012. File state income tax only 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. File state income tax only See Rev. File state income tax only Proc. File state income tax only 2007-30, 2007-1 C. File state income tax only B. File state income tax only 1104, for passenger automobiles first leased during calendar year 2007; Rev. File state income tax only Proc. File state income tax only 2008-22, 2008-1 C. File state income tax only B. File state income tax only 658, for passenger automobiles first leased during calendar year 2008; Rev. File state income tax only Proc. File state income tax only 2009-24, 2009-17 I. File state income tax only R. File state income tax only B. File state income tax only 885, for passenger automobiles first leased during calendar year 2009; Rev. File state income tax only Proc. File state income tax only 2010-18, 2010-9 I. File state income tax only R. File state income tax only B. File state income tax only 427, as amplified and modified by section 4. File state income tax only 03 of Rev. File state income tax only Proc. File state income tax only 2011-21, 2011-12 I. File state income tax only R. File state income tax only B. File state income tax only 560, for passenger automobiles first leased during calendar year 2010; and Rev. File state income tax only Proc. File state income tax only 2011-21, for passenger automobiles first leased during calendar year 2011. File state income tax only SECTION 4. File state income tax only APPLICATION . File state income tax only 01 Limitations on Depreciation Deductions for Certain Automobiles. File state income tax only (1) Amount of the inflation adjustment. File state income tax only (a) Passenger automobiles (other than trucks or vans). File state income tax only 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. File state income tax only 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. File state income tax only The new car component of the CPI was 115. File state income tax only 2 for October 1987 and 143. File state income tax only 419 for October 2011. File state income tax only The October 2011 index exceeded the October 1987 index by 28. File state income tax only 219. File state income tax only Therefore, the automobile price inflation adjustment for 2012 for passenger automobiles (other than trucks and vans) is 24. File state income tax only 5 percent (28. File state income tax only 219/115. File state income tax only 2 x 100%). File state income tax only The dollar limitations in § 280F(a) are multiplied by a factor of 0. File state income tax only 245, 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 2012. File state income tax only This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2012. File state income tax only (b) Trucks and vans. File state income tax only To determine the dollar limitations for trucks and vans first placed in service during calendar year 2012, the Service uses the new truck component of the CPI instead of the new car component. File state income tax only The new truck component of the CPI was 112. File state income tax only 4 for October 1987 and 146. File state income tax only 607 for October 2011. File state income tax only The October 2011 index exceeded the October 1987 index by 34. File state income tax only 207. File state income tax only Therefore, the automobile price inflation adjustment for 2012 for trucks and vans is 30. File state income tax only 43 percent (34. File state income tax only 207/112. File state income tax only 4 x 100%). File state income tax only The dollar limitations in § 280F(a) are multiplied by a factor of 0. File state income tax only 3043, 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. File state income tax only This adjustment applies to all trucks and vans that are first placed in service in calendar year 2012. File state income tax only (2) Amount of the limitation. File state income tax only 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 2012. File state income tax only 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 2012 for which the § 168(k) additional first year depreciation deduction applies. File state income tax only 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 2012 for which the § 168(k) additional first year depreciation deduction does not apply. File state income tax only REV. File state income tax only PROC. File state income tax only 2012-23 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 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. File state income tax only PROC. File state income tax only 2012-23 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. File state income tax only PROC. File state income tax only 2012-23 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 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. File state income tax only PROC. File state income tax only 2012-23 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 . File state income tax only 02 Inclusions in Income of Lessees of Passenger Automobiles. File state income tax only A taxpayer must follow the procedures in § 1. File state income tax only 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2012. File state income tax only 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. File state income tax only REV. File state income tax only PROC. File state income tax only 2012-23 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 2 4 5 6 8 19,000 19,500 2 4 7 7 9 19,500 20,000 2 5 8 8 10 20,000 20,500 3 5 9 10 11 20,500 21,000 3 6 9 12 12 21,000 21,500 3 7 10 12 14 21,500 22,000 3 8 11 13 16 22,000 23,000 4 8 13 15 17 23,000 24,000 4 10 15 17 20 24,000 25,000 5 11 17 19 23 25,000 26,000 6 12 19 21 26 26,000 27,000 6 14 20 24 28 27,000 28,000 7 15 22 26 31 28,000 29,000 7 16 25 28 33 29,000 30,000 8 18 25 32 35 30,000 31,000 9 19 27 34 38 31,000 32,000 9 20 30 36 41 32,000 33,000 10 21 32 38 43 33,000 34,000 10 23 33 41 46 34,000 35,000 11 24 35 43 49 35,000 36,000 12 25 37 45 52 36,000 37,000 12 27 39 47 54 37,000 38,000 13 28 41 49 57 38,000 39,000 13 29 43 52 59 39,000 40,000 14 30 45 54 62 40,000 41,000 14 32 47 56 65 41,000 42,000 15 33 49 58 68 42,000 43,000 16 34 51 61 70 43,000 44,000 16 36 52 63 73 44,000 45,000 17 37 54 66 75 45,000 46,000 17 38 57 67 78 46,000 47,000 18 39 59 70 80 47,000 48,000 19 40 61 72 83 48,000 49,000 19 42 62 75 86 49,000 50,000 20 43 64 77 89 50,000 51,000 20 45 66 79 91 51,000 52,000 21 46 68 81 94 52,000 53,000 21 47 70 84 96 53,000 54,000 22 48 72 86 99 54,000 55,000 23 49 74 88 102 55,000 56,000 23 51 76 90 104 56,000 57,000 24 52 78 92 107 57,000 58,000 24 54 79 95 110 58,000 59,000 25 55 81 97 113 59,000 60,000 26 56 83 100 115 60,000 62,000 26 58 86 103 119 62,000 64,000 28 60 90 108 124 64,000 66,000 29 63 94 112 129 66,000 68,000 30 66 97 117 135 68,000 70,000 31 68 102 121 140 70,000 72,000 32 71 105 126 145 72,000 74,000 33 74 109 130 151 74,000 76,000 35 76 113 135 156 76,000 78,000 36 78 117 140 161 78,000 80,000 37 81 120 145 166 80,000 85,000 39 86 127 152 176 85,000 90,000 42 92 137 163 189 90,000 95,000 45 98 147 175 202 95,000 100,000 48 105 155 187 215 100,000 110,000 52 115 170 203 235 110,000 120,000 58 127 189 227 262 120,000 130,000 64 140 208 250 288 130,000 140,000 70 153 227 272 315 140,000 150,000 75 166 246 296 340 150,000 160,000 81 179 265 318 368 160,000 170,000 87 192 284 341 394 170,000 180,000 93 204 304 364 420 180,000 190,000 99 217 323 387 446 190,000 200,000 105 230 342 409 473 200,000 210,000 111 243 361 432 499 210,000 220,000 116 256 380 455 526 220,000 230,000 122 269 399 478 552 230,000 240,000 128 282 418 501 578 240,000 and up 134 294 437 524 605 REV. File state income tax only PROC. File state income tax only 2012-23 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 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 4 5 6 7 19,500 20,000 2 4 6 7 9 20,000 20,500 2 5 7 8 10 20,500 21,000 2 5 8 10 11 21,000 21,500 3 6 9 10 13 21,500 22,000 3 6 10 12 14 22,000 23,000 3 8 11 14 15 23,000 24,000 4 9 13 16 18 24,000 25,000 4 10 15 19 21 25,000 26,000 5 11 17 21 24 26,000 27,000 6 12 19 23 26 27,000 28,000 6 14 21 25 29 28,000 29,000 7 15 23 27 32 29,000 30,000 7 17 24 30 34 30,000 31,000 8 18 26 32 37 31,000 32,000 9 19 28 34 40 32,000 33,000 9 20 31 36 42 33,000 34,000 10 21 33 39 44 34,000 35,000 10 23 34 41 48 35,000 36,000 11 24 36 44 50 36,000 37,000 12 25 38 46 53 37,000 38,000 12 27 40 48 55 38,000 39,000 13 28 42 50 58 39,000 40,000 13 29 44 53 60 40,000 41,000 14 31 45 55 63 41,000 42,000 14 32 48 57 66 42,000 43,000 15 33 50 59 69 43,000 44,000 16 34 52 61 72 44,000 45,000 16 36 53 64 74 45,000 46,000 17 37 55 66 77 46,000 47,000 17 38 58 68 79 47,000 48,000 18 40 59 70 82 48,000 49,000 19 41 61 73 84 49,000 50,000 19 42 63 75 87 50,000 51,000 20 43 65 78 89 51,000 52,000 20 45 66 80 93 52,000 53,000 21 46 68 83 95 53,000 54,000 21 48 70 84 98 54,000 55,000 22 49 72 87 100 55,000 56,000 23 50 74 89 103 56,000 57,000 23 51 76 92 105 57,000 58,000 24 52 78 94 108 58,000 59,000 24 54 80 96 111 59,000 60,000 25 55 82 98 114 60,000 62,000 26 57 85 101 118 62,000 64,000 27 60 88 106 123 64,000 66,000 28 62 93 110 128 66,000 68,000 29 65 96 115 134 68,000 70,000 30 67 100 120 139 70,000 72,000 32 70 103 125 144 72,000 74,000 33 72 108 129 149 74,000 76,000 34 75 111 134 155 76,000 78,000 35 78 115 138 160 78,000 80,000 36 80 119 143 165 80,000 85,000 38 85 125 151 175 85,000 90,000 41 91 135 163 187 90,000 95,000 44 98 144 174 201 95,000 100,000 47 104 154 185 214 100,000 110,000 52 113 169 202 234 110,000 120,000 57 127 187 225 261 120,000 130,000 63 139 207 248 287 130,000 140,000 69 152 226 271 313 140,000 150,000 75 165 245 294 339 150,000 160,000 81 178 264 316 366 160,000 170,000 87 190 283 340 392 170,000 180,000 92 204 302 362 419 180,000 190,000 98 216 322 385 445 190,000 200,000 104 229 340 409 471 200,000 210,000 110 242 359 431 498 210,000 220,000 116 255 378 454 524 220,000 230,000 122 267 398 477 551 230,000 240,000 127 281 416 500 577 240,000 and up 133 294 435 523 603 SECTION 5. File state income tax only EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2012. File state income tax only SECTION 6. File state income tax only DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. File state income tax only Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). File state income tax only For further information regarding this revenue procedure, contact Mr. File state income tax only Harvey at (202) 622-4930 (not a toll-free call). File state income tax only Prev  Up  Next   Home   More Internal Revenue Bulletins
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Watch Out for Tax Scams as Filing Season Opening Nears

IRS YouTube Videos:
Tax Scams: English | Spanish | ASL
ID Theft: Are You a Victim of Identity Theft? English | Spanish | ASL
ID Theft: Protect Yourself From Identity Theft English | Spanish | ASL
ID Theft: IRS Efforts on Identity Theft English | Spanish

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ID Theft: Protect Yourself from Identity Theft English | Spanish
ID Theft: Are You a Victim of Identity Theft? English | Spanish

IR-2014-5, Jan. 23, 2014

WASHINGTON — With the start of the 2014 tax season approaching on Jan. 31, the Internal Revenue Service urged taxpayers to be aware that tax-related scams using the IRS name proliferate during this time of year.

Tax scams can take many forms, with perpetrators posing as the IRS in everything from e-mail refund schemes to phone impersonators. The IRS warned taxpayers to be vigilant of any unexpected communication that is purportedly from the IRS at the start of tax season.

The IRS encourages taxpayers to be on the lookout for phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for personal identification numbers (PINs), passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov.

Additional information on how to report phishing scams involving the IRS is available on the genuine IRS website, IRS.gov.

In addition, the IRS continues to aggressively expand its efforts to protect and prevent refund fraud involving identity theft as well as work with federal, state and local officials to pursue the perpetrators of this fraud.

The IRS offers several suggestions for taxpayers to help protect themselves against scams and identity theft:

  • Don’t carry your Social Security card or any documents that include your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
  • Don’t give a business your SSN or ITIN just because they ask. Give it only when required.
  • Protect your financial information.
  • Check your credit report every 12 months.
  • Secure personal information in your home.
  • Protect your personal computers by using firewalls and anti-spam/virus software, updating security patches and changing passwords for Internet accounts.
  • Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact and are sure of the recipient.

For more information, see the special identity theft section on IRS.gov and IRS Fact Sheet 2014-1, IRS Combats Identity Theft and Refund Fraud on Many Fronts.

Taxpayers also should be very careful when choosing a tax preparer. While most preparers provide excellent service to their clients, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.

Refer to our Tips to Help you Choose a Tax Preparer for the upcoming 2014 Tax Season starting Jan. 31.  

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Page Last Reviewed or Updated: 23-Jan-2014

The File State Income Tax Only

File state income tax only 5. File state income tax only   Additional Rules for Listed Property Table of Contents Introduction Useful Items - You may want to see: What Is Listed Property?Passenger Automobiles Other Property Used for Transportation Computers and Related Peripheral Equipment Can Employees Claim a Deduction? What Is the Business-Use Requirement?How To Allocate Use Qualified Business Use Recapture of Excess Depreciation Lessee's Inclusion Amount Do the Passenger Automobile Limits Apply?Maximum Depreciation Deduction Deductions After the Recovery Period Deductions For Passenger Automobiles Acquired in a Trade-in What Records Must Be Kept?Adequate Records How Is Listed Property Information Reported? Introduction This chapter discusses the deduction limits and other special rules that apply to certain listed property. File state income tax only Listed property includes cars and other property used for transportation, property used for entertainment, and certain computers. File state income tax only Deductions for listed property (other than certain leased property) are subject to the following special rules and limits. File state income tax only Deduction for employees. File state income tax only If your use of the property is not for your employer's convenience or is not required as a condition of your employment, you cannot deduct depreciation or rent expenses for your use of the property as an employee. File state income tax only Business-use requirement. File state income tax only If the property is not used predominantly (more than 50%) for qualified business use, you cannot claim the section 179 deduction or a special depreciation allowance. File state income tax only In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS) using the straight line method over the ADS recovery period. File state income tax only You may also have to recapture (include in income) any excess depreciation claimed in previous years. File state income tax only A similar inclusion amount applies to certain leased property. File state income tax only Passenger automobile limits and rules. File state income tax only Annual limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. File state income tax only You can continue to deduct depreciation for the unrecovered basis resulting from these limits after the end of the recovery period. File state income tax only This chapter defines listed property and explains the special rules and depreciation deduction limits that apply, including the special inclusion amount rule for leased property. File state income tax only It also discusses the recordkeeping rules for listed property and explains how to report information about the property on your tax return. File state income tax only Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 535 Business Expenses 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 6 for information about getting publications and forms. File state income tax only What Is Listed Property? Listed property is any of the following. File state income tax only Passenger automobiles (as defined later). File state income tax only Any other property used for transportation, unless it is an excepted vehicle. File state income tax only Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment). File state income tax only Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. File state income tax only A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business as discussed in Publication 587. File state income tax only Improvements to listed property. File state income tax only   An improvement made to listed property that must be capitalized is treated as a new item of depreciable property. File state income tax only The recovery period and method of depreciation that apply to the listed property as a whole also apply to the improvement. File state income tax only For example, if you must depreciate the listed property using the straight line method, you also must depreciate the improvement using the straight line method. File state income tax only Passenger Automobiles A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans). File state income tax only It includes any part, component, or other item physically attached to the automobile at the time of purchase or usually included in the purchase price of an automobile. File state income tax only The following vehicles are not considered passenger automobiles for these purposes. File state income tax only An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business. File state income tax only A vehicle used directly in the trade or business of transporting persons or property for pay or hire. File state income tax only A truck or van that is a qualified nonpersonal use vehicle. File state income tax only Qualified nonpersonal use vehicles. File state income tax only   Qualified nonpersonal use vehicles are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. File state income tax only They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation , next. File state income tax only They also include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. File state income tax only For a detailed discussion of passenger automobiles, including leased passenger automobiles, see  Publication 463. File state income tax only Other Property Used for Transportation Although vehicles used to transport persons or property for pay or hire and vehicles rated at more than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for transportation” and are subject to the special rules for listed property. File state income tax only Other property used for transportation includes trucks, buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods. File state income tax only Excepted vehicles. File state income tax only   Other property used for transportation does not include the following qualified nonpersonal use vehicles (defined earlier under Passenger Automobiles ). File state income tax only Clearly marked police and fire vehicles. File state income tax only Unmarked vehicles used by law enforcement officers if the use is officially authorized. File state income tax only Ambulances used as such and hearses used as such. File state income tax only Any vehicle with a loaded gross vehicle weight of over 14,000 pounds that is designed to carry cargo. File state income tax only Bucket trucks (cherry pickers), cement mixers, dump trucks (including garbage trucks), flatbed trucks, and refrigerated trucks. File state income tax only Combines, cranes and derricks, and forklifts. File state income tax only Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat. File state income tax only Qualified moving vans. File state income tax only Qualified specialized utility repair trucks. File state income tax only School buses used in transporting students and employees of schools. File state income tax only Other buses with a capacity of at least 20 passengers that are used as passenger buses. File state income tax only Tractors and other special purpose farm vehicles. File state income tax only Clearly marked police and fire vehicle. File state income tax only   A clearly marked police or fire vehicle is a vehicle that meets all the following requirements. File state income tax only It is owned or leased by a governmental unit or an agency or instrumentality of a governmental unit. File state income tax only It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is on call at all times. File state income tax only It is prohibited from being used for personal use (other than commuting) outside the limit of the police officer's arrest powers or the fire fighter's obligation to respond to an emergency. File state income tax only It is clearly marked with painted insignia or words that make it readily apparent that it is a police or fire vehicle. File state income tax only A marking on a license plate is not a clear marking for these purposes. File state income tax only Qualified moving van. File state income tax only   A qualified moving van is any truck or van used by a professional moving company for moving household or business goods if the following requirements are met. File state income tax only No personal use of the van is allowed other than for travel to and from a move site or for minor personal use, such as a stop for lunch on the way from one move site to another. File state income tax only Personal use for travel to and from a move site happens no more than five times a month on average. File state income tax only Personal use is limited to situations in which it is more convenient to the employer, because of the location of the employee's residence in relation to the location of the move site, for the van not to be returned to the employer's business location. File state income tax only Qualified specialized utility repair truck. File state income tax only   A truck is a qualified specialized utility repair truck if it is not a van or pickup truck and all the following apply. File state income tax only The truck was specifically designed for and is used to carry heavy tools, testing equipment, or parts. File state income tax only Shelves, racks, or other permanent interior construction has been installed to carry and store the tools, equipment, or parts and would make it unlikely that the truck would be used, other than minimally, for personal purposes. File state income tax only The employer requires the employee to drive the truck home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility services. File state income tax only Computers and Related Peripheral Equipment A computer is a programmable, electronically activated device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. File state income tax only It consists of a central processing unit with extensive storage, logic, arithmetic, and control capabilities. File state income tax only Related peripheral equipment is any auxiliary machine which is designed to be controlled by the central processing unit of a computer. File state income tax only The following are neither computers nor related peripheral equipment. File state income tax only Any equipment that is an integral part of other property that is not a computer. File state income tax only Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar equipment. File state income tax only Equipment of a kind used primarily for the user's amusement or entertainment, such as video games. File state income tax only Can Employees Claim a Deduction? If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned or rented) in performing services as an employee only if your use is a business use. File state income tax only The use of your property in performing services as an employee is a business use only if both the following requirements are met. File state income tax only The use is for your employer's convenience. File state income tax only The use is required as a condition of your employment. File state income tax only If these requirements are not met, you cannot deduct depreciation (including the section 179 deduction) or rent expenses for your use of the property as an employee. File state income tax only Employer's convenience. File state income tax only   Whether the use of listed property is for your employer's convenience must be determined from all the facts. File state income tax only The use is for your employer's convenience if it is for a substantial business reason of the employer. File state income tax only The use of listed property during your regular working hours to carry on your employer's business generally is for the employer's convenience. File state income tax only Condition of employment. File state income tax only   Whether the use of listed property is a condition of your employment depends on all the facts and circumstances. File state income tax only The use of property must be required for you to perform your duties properly. File state income tax only Your employer does not have to require explicitly that you use the property. File state income tax only However, a mere statement by the employer that the use of the property is a condition of your employment is not sufficient. File state income tax only Example 1. File state income tax only Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services. File state income tax only She owns and uses a motorcycle to deliver packages to downtown offices. File state income tax only We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. File state income tax only Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of employment. File state income tax only Example 2. File state income tax only Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. File state income tax only He must travel to these sites on a regular basis. File state income tax only Uplift does not furnish an automobile or explicitly require him to use his own automobile. File state income tax only However, it pays him for any costs he incurs in traveling to the various sites. File state income tax only The use of his own automobile or a rental automobile is for the convenience of Uplift and is required as a condition of employment. File state income tax only Example 3. File state income tax only Assume the same facts as in Example 2 except that Uplift furnishes a car to Bill, who chooses to use his own car and receive payment for using it. File state income tax only The use of his own car is neither for the convenience of Uplift nor required as a condition of employment. File state income tax only Example 4. File state income tax only Marilyn Lee is a pilot for Y Company, a small charter airline. File state income tax only Y requires pilots to obtain 80 hours of flight time annually in addition to flight time spent with the airline. File state income tax only Pilots usually can obtain these hours by flying with the Air Force Reserve or by flying part-time with another airline. File state income tax only Marilyn owns her own airplane. File state income tax only The use of her airplane to obtain the required flight hours is neither for the convenience of the employer nor required as a condition of employment. File state income tax only Example 5. File state income tax only David Rule is employed as an engineer with Zip, an engineering contracting firm. File state income tax only He occasionally takes work home at night rather than work late in the office. File state income tax only He owns and uses a home computer which is virtually identical to the office model. File state income tax only His use of the computer is neither for the convenience of his employer nor required as a condition of employment. File state income tax only What Is the Business-Use Requirement? You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciate listed property using GDS and a declining balance method if the property meets the business-use requirement. File state income tax only To meet this requirement, listed property must be used predominantly (more than 50% of its total use) for qualified business use. File state income tax only If this requirement is not met, the following rules apply. File state income tax only Property not used predominantly for qualified business use during the year it is placed in service does not qualify for the section 179 deduction. File state income tax only Property not used predominantly for qualified business use during the year it is placed in service does not qualify for a special depreciation allowance. File state income tax only Any depreciation deduction under MACRS for property not used predominantly for qualified business use during any year must be figured using the straight line method over the ADS recovery period. File state income tax only This rule applies each year of the recovery period. File state income tax only Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is no longer used predominantly for qualified business use. File state income tax only A lessee must add an inclusion amount to income in the first year in which the leased property is not used predominantly for qualified business use. File state income tax only Being required to use the straight line method for an item of listed property not used predominantly for qualified business use is not the same as electing the straight line method. File state income tax only It does not mean that you have to use the straight line method for other property in the same class as the item of listed property. File state income tax only Exception for leased property. File state income tax only   The business-use requirement generally does not apply to any listed property leased or held for leasing by anyone regularly engaged in the business of leasing listed property. File state income tax only   You are considered regularly engaged in the business of leasing listed property only if you enter into contracts for the leasing of listed property with some frequency over a continuous period of time. File state income tax only This determination is made on the basis of the facts and circumstances in each case and takes into account the nature of your business in its entirety. File state income tax only Occasional or incidental leasing activity is insufficient. File state income tax only For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in the business of leasing automobiles. File state income tax only An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is not regularly engaged in the business of leasing the property used by the employee. File state income tax only How To Allocate Use To determine whether the business-use requirement is met, you must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. File state income tax only For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. File state income tax only You determine the percentage of qualified business use by dividing the number of miles you drove the vehicle for business purposes during the year by the total number of miles you drove the vehicle for all purposes (including business miles) during the year. File state income tax only For other listed property, allocate the property's use on the basis of the most appropriate unit of time the property is actually used (rather than merely being available for use). File state income tax only For example, you can determine the percentage of business use of a computer by dividing the number of hours you used the computer for business purposes during the year by the total number of hours you used the computer for all purposes (including business use) during the year. File state income tax only Entertainment use. File state income tax only   Treat the use of listed property for entertainment, recreation, or amusement purposes as a business use only to the extent you can deduct expenses (other than interest and property tax expenses) due to its use as an ordinary and necessary business expense. File state income tax only Commuting use. File state income tax only   The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. File state income tax only For example, a business telephone call made on a car telephone while commuting to work does not change the character of the trip from commuting to business. File state income tax only This is also true for a business meeting held in a car while commuting to work. File state income tax only Similarly, a business call made on an otherwise personal trip does not change the character of a trip from personal to business. File state income tax only The fact that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use. File state income tax only Use of your automobile by another person. File state income tax only   If someone else uses your automobile, do not treat that use as business use unless one of the following conditions applies. File state income tax only That use is directly connected with your business. File state income tax only You properly report the value of the use as income to the other person and withhold tax on the income where required. File state income tax only You are paid a fair market rent. File state income tax only Treat any payment to you for the use of the automobile as a rent payment for purposes of item (3). File state income tax only Employee deductions. File state income tax only   If you are an employee, do not treat your use of listed property as business use unless it is for your employer's convenience and is required as a condition of your employment. File state income tax only See Can Employees Claim a Deduction , earlier. File state income tax only Qualified Business Use Qualified business use of listed property is any use of the property in your trade or business. File state income tax only However, it does not include the following uses. File state income tax only The leasing of property to any 5% owner or related person (to the extent the property is used by a 5% owner or person related to the owner or lessee of the property). File state income tax only The use of property as pay for the services of a 5% owner or related person. File state income tax only The use of property as pay for services of any person (other than a 5% owner or related person), unless the value of the use is included in that person's gross income and income tax is withheld on that amount where required. File state income tax only Property does not stop being used predominantly for qualified business use because of a transfer at death. File state income tax only Exception for leasing or compensatory use of aircraft. File state income tax only   Treat the leasing of any aircraft by a 5% owner or related person, or the compensatory use of any aircraft, as a qualified business use if at least 25% of the total use of the aircraft during the year is for a qualified business use. File state income tax only 5% owner. File state income tax only   For a business entity that is not a corporation, a 5% owner is any person who owns more than 5% of the capital or profits interest in the business. File state income tax only   For a corporation, a 5% owner is any person who owns, or is considered to own, either of the following. File state income tax only More than 5% of the outstanding stock of the corporation. File state income tax only Stock possessing more than 5% of the total combined voting power of all stock in the corporation. File state income tax only Related persons. File state income tax only   For a description of related persons, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 . File state income tax only For this purpose, however, treat as related persons only the relationships listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears. File state income tax only Examples. File state income tax only   The following examples illustrate whether the use of business property is qualified business use. File state income tax only Example 1. File state income tax only John Maple is the sole proprietor of a plumbing contracting business. File state income tax only John employs his brother, Richard, in the business. File state income tax only As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. File state income tax only The company includes the value of the personal use of the automobile in Richard's gross income and properly withholds tax on it. File state income tax only The use of the automobile is pay for the performance of services by a related person, so it is not a qualified business use. File state income tax only Example 2. File state income tax only John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. File state income tax only He does not include the value of the personal use of the company automobiles as part of their compensation and he does not withhold tax on the value of the use of the automobiles. File state income tax only This use of company automobiles by employees is not a qualified business use. File state income tax only Example 3. File state income tax only James Company Inc. File state income tax only owns several automobiles that its employees use for business purposes. File state income tax only The employees also are allowed to take the automobiles home at night. File state income tax only The fair market value of each employee's use of an automobile for any personal purpose, such as commuting to and from work, is reported as income to the employee and James Company withholds tax on it. File state income tax only This use of company automobiles by employees, even for personal purposes, is a qualified business use for the company. File state income tax only Investment Use The use of property to produce income in a nonbusiness activity (investment use) is not a qualified business use. File state income tax only However, you can treat the investment use as business use to figure the depreciation deduction for the property in a given year. File state income tax only Example 1. File state income tax only Sarah Bradley uses a home computer 50% of the time to manage her investments. File state income tax only She also uses the computer 40% of the time in her part-time consumer research business. File state income tax only Sarah's home computer is listed property because it is not used at a regular business establishment. File state income tax only She does not use the computer predominantly for qualified business use. File state income tax only Therefore, she cannot elect a section 179 deduction or claim a special depreciation allowance for the computer. File state income tax only She must depreciate it using the straight line method over the ADS recovery period. File state income tax only Her combined business/investment use for determining her depreciation deduction is 90%. File state income tax only Example 2. File state income tax only If Sarah uses her computer 30% of the time to manage her investments and 60% of the time in her consumer research business, it is used predominantly for qualified business use. File state income tax only She can elect a section 179 deduction and, if she does not deduct all the computer's cost, she can claim a special depreciation allowance and depreciate the computer using the 200% declining balance method over the GDS recovery period. File state income tax only Her combined business/investment use for determining her depreciation deduction is 90%. File state income tax only Recapture of Excess Depreciation If you used listed property more than 50% in a qualified business use in the year you placed it in service, you must recapture (include in income) excess depreciation in the first year you use it 50% or less. File state income tax only You also increase the adjusted basis of your property by the same amount. File state income tax only Excess depreciation is: The depreciation allowable for the property (including any section 179 deduction and special depreciation allowance claimed) for years before the first year you do not use the property predominantly for qualified business use, minus The depreciation that would have been allowable for those years if you had not used the property predominantly for qualified business use in the year you placed it in service. File state income tax only To determine the amount in (2) above, you must refigure the depreciation using the straight line method and the ADS recovery period. File state income tax only Example. File state income tax only In June 2009, Ellen Rye purchased and placed in service a pickup truck that cost $18,000. File state income tax only She used it only for qualified business use for 2009 through 2012. File state income tax only Ellen claimed a section 179 deduction of $10,000 based on the purchase of the truck. File state income tax only She began depreciating it using the 200% DB method over a 5-year GDS recovery period. File state income tax only The pickup truck's gross vehicle weight was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the Passenger Automobile Limits Apply. File state income tax only During 2013, she used the truck 50% for business and 50% for personal purposes. File state income tax only She includes $4,018 excess depreciation in her gross income for 2013. File state income tax only The excess depreciation is determined as follows. File state income tax only Total section 179 deduction ($10,000) and depreciation claimed ($6,618) for 2009 through 2012. File state income tax only (Depreciation is from Table A-1. File state income tax only ) $16,618 Minus: Depreciation allowable (Table A-8):     2009 – 10% of $18,000 $1,800   2010 – 20% of $18,000 3,600   2011 – 20% of $18,000 3,600   2012 – 20% of $18,000 3,600 12,600 Excess depreciation $4,018 If Ellen's use of the truck does not change to 50% for business and 50% for personal purposes until 2015, there will be no excess depreciation. File state income tax only The total depreciation allowable using Table A-8 through 2015 will be $18,000, which equals the total of the section 179 deduction and depreciation she will have claimed. File state income tax only Where to figure and report recapture. File state income tax only   Use Form 4797, Part IV, to figure the recapture amount. File state income tax only Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. File state income tax only For example, report the recapture amount as other income on Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. File state income tax only If you took the depreciation deduction on Form 2106, report the recapture amount as other income on Form 1040, line 21. File state income tax only Lessee's Inclusion Amount If you use leased listed property other than a passenger automobile for business/investment use, you must include an amount in your income in the first year your qualified business-use percentage is 50% or less. File state income tax only Your qualified business-use percentage is the part of the property's total use that is qualified business use (defined earlier). File state income tax only For the inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Publication 463. File state income tax only The inclusion amount is the sum of Amount A and Amount B, described next. File state income tax only However, see the special rules for the inclusion amount, later, if your lease begins in the last 9 months of your tax year or is for less than one year. File state income tax only Amount A. File state income tax only   Amount A is: The fair market value of the property, multiplied by The business/investment use for the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A-19 in Appendix A . File state income tax only   The fair market value of the property is the value on the first day of the lease term. File state income tax only If the capitalized cost of an item of listed property is specified in the lease agreement, you must treat that amount as the fair market value. File state income tax only Amount B. File state income tax only   Amount B is: The fair market value of the property, multiplied by The average of the business/investment use for all tax years the property was leased that precede the first tax year the qualified business-use percentage is 50% or less, multiplied by The applicable percentage from Table A–20 in Appendix A . File state income tax only Maximum inclusion amount. File state income tax only   The inclusion amount cannot be more than the sum of the deductible amounts of rent for the tax year in which the lessee must include the amount in gross income. File state income tax only Inclusion amount worksheet. File state income tax only   The following worksheet is provided to help you figure the inclusion amount for leased listed property. File state income tax only Inclusion Amount Worksheet for Leased Listed Property 1. File state income tax only Fair market value   2. File state income tax only Business/investment use for first year business use is 50% or less   3. File state income tax only Multiply line 1 by line 2. File state income tax only   4. File state income tax only Rate (%) from Table A-19   5. File state income tax only Multiply line 3 by line 4. File state income tax only This is Amount A. File state income tax only   6. File state income tax only Fair market value   7. File state income tax only Average business/investment use for years property leased before the first year business use is 50% or less . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only . File state income tax only   8. File state income tax only Multiply line 6 by line 7   9. File state income tax only Rate (%) from Table A-20   10. File state income tax only Multiply line 8 by line 9. File state income tax only This is Amount B. File state income tax only   11. File state income tax only Add line 5 and line 10. File state income tax only This is your inclusion amount. File state income tax only Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File state income tax only )         Example. File state income tax only On February 1, 2011, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. File state income tax only The lease is for a period of 5 years. File state income tax only Larry does not use the computer at a regular business establishment, so it is listed property. File state income tax only His business use of the property (all of which is qualified business use) is 80% in 2011, 60% in 2012, and 40% in 2013. File state income tax only He must add an inclusion amount to gross income for 2013, the first tax year his qualified business-use percentage is 50% or less. File state income tax only The computer has a 5-year recovery period under both GDS and ADS. File state income tax only 2013 is the third tax year of the lease, so the applicable percentage from Table A-19 is −19. File state income tax only 8%. File state income tax only The applicable percentage from Table A-20 is 22. File state income tax only 0%. File state income tax only Larry's deductible rent for the computer for 2013 is $800. File state income tax only Larry uses the Inclusion amount worksheet. File state income tax only to figure the amount he must include in income for 2013. File state income tax only His inclusion amount is $224, which is the sum of −$238 (Amount A) and $462 (Amount B). File state income tax only Inclusion Amount Worksheet for Leased Listed Property 1. File state income tax only Fair market value $3,000   2. File state income tax only Business/investment use for first year business use is 50% or less 40 % 3. File state income tax only Multiply line 1 by line 2. File state income tax only 1,200   4. File state income tax only Rate (%) from Table A-19 −19. File state income tax only 8 % 5. File state income tax only Multiply line 3 by line 4. File state income tax only This is Amount A. File state income tax only −238   6. File state income tax only Fair market value 3,000   7. File state income tax only Average business/investment use for years property leased before the first year business use is 50% or less 70 % 8. File state income tax only Multiply line 6 by line 7 2,100   9. File state income tax only Rate (%) from Table A-20 22. File state income tax only 0 % 10. File state income tax only Multiply line 8 by line 9. File state income tax only This is Amount B. File state income tax only 462   11. File state income tax only Add line 5 and line 10. File state income tax only This is your inclusion amount. File state income tax only Enter here and as other income on the form or schedule on which you originally took the deduction (for example, Schedule C or F (Form 1040), Form 1040, Form 1120, etc. File state income tax only ) $224           Lease beginning in the last 9 months of your tax year. File state income tax only    The inclusion amount is subject to a special rule if all the following apply. File state income tax only The lease term begins within 9 months before the close of your tax year. File state income tax only You do not use the property predominantly (more than 50%) for qualified business use during that part of the tax year. File state income tax only The lease term continues into your next tax year. File state income tax only Under this special rule, add the inclusion amount to income in the next tax year. File state income tax only Figure the inclusion amount by taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount Worksheet for Leased Listed Property) and the applicable percentage for the tax year the lease term begins. File state income tax only Skip lines 6 through 9 of the worksheet and enter zero on line 10. File state income tax only Example 1. File state income tax only On August 1, 2012, Julie Rule, a calendar year taxpayer, leased and placed in service an item of listed property. File state income tax only The property is 5-year property with a fair market value of $10,000. File state income tax only Her property has a recovery period of 5 years under ADS. File state income tax only The lease is for 5 years. File state income tax only Her business use of the property was 50% in 2012 and 90% in 2013. File state income tax only She paid rent of $3,600 for 2012, of which $3,240 is deductible. File state income tax only She must include $147 in income in 2013. File state income tax only The $147 is the sum of Amount A and Amount B. File state income tax only Amount A is $147 ($10,000 × 70% × 2. File state income tax only 1%), the product of the fair market value, the average business use for 2012 and 2013, and the applicable percentage for year one from Table A-19 . File state income tax only Amount B is zero. File state income tax only Lease for less than one year. File state income tax only   A special rule for the inclusion amount applies if the lease term is less than one year and you do not use the property predominantly (more than 50%) for qualified business use. File state income tax only The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction. File state income tax only The numerator of the fraction is the number of days in the lease term and the denominator is 365 (or 366 for leap years). File state income tax only   The lease term for listed property other than residential rental or nonresidential real property includes options to renew. File state income tax only If you have two or more successive leases that are part of the same transaction (or a series of related transactions) for the same or substantially similar property, treat them as one lease. File state income tax only Example 2. File state income tax only On October 1, 2012, John Joyce, a calendar year taxpayer, leased and placed in service an item of listed property that is 3-year property. File state income tax only This property had a fair market value of $15,000 and a recovery period of 5 years under ADS. File state income tax only The lease term was 6 months (ending on March 31, 2013), during which he used the property 45% in business. File state income tax only He must include $71 in income in 2013. File state income tax only The $71 is the sum of Amount A and Amount B. File state income tax only Amount A is $71 ($15,000 × 45% × 2. File state income tax only 1% × 183/365), the product of the fair market value, the average business use for both years, and the applicable percentage for year one from Table A-19 , prorated for the length of the lease. File state income tax only Amount B is zero. File state income tax only Where to report inclusion amount. File state income tax only   Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on which you took the deduction for your rental costs. File state income tax only For example, report the inclusion amount as other income on Schedule C (Form 1040) if you took the deduction on Schedule C. File state income tax only If you took the deduction for rental costs on Form 2106, report the inclusion amount as other income on Form 1040, line 21. File state income tax only Do the Passenger Automobile Limits Apply? The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim for a passenger automobile (defined earlier) each year is limited. File state income tax only This section describes the maximum depreciation deduction amounts for 2013 and explains how to deduct, after the recovery period, the unrecovered basis of your property that results from applying the passenger automobile limit. File state income tax only Exception for leased cars. File state income tax only   The passenger automobile limits generally do not apply to passenger automobiles leased or held for leasing by anyone regularly engaged in the business of leasing passenger automobiles. File state income tax only For information on when you are considered regularly engaged in the business of leasing listed property, including passenger automobiles, see Exception for leased property , earlier, under What Is the Business-Use Requirement . File state income tax only Maximum Depreciation Deduction The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. File state income tax only They are based on the date you placed the automobile in service. File state income tax only Passenger Automobiles The maximum deduction amounts for most passenger automobiles are shown in the following table. File state income tax only Maximum Depreciation Deduction for Passenger Automobiles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,1601 $5,100 $3,050 $1,875 2012 11,1601 5,100 3,050 1,875 2011 11,0602 4,900 2,950 1,775 2010 11,0602  4,900 2,950 1,775 2009 10,9603 4,800 2,850 1,775 2008 10,9603  4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6104 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7105 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6606 4,900 2,950 1,775 1If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File state income tax only 2If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,060. File state income tax only 3If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $2,960. File state income tax only 4If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $2,960. File state income tax only 5If you acquired the vehicle before 5/06/03, the maximum deduction is $7,660. File state income tax only If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File state income tax only 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,060. File state income tax only If your business/investment use of the automobile is less than 100%, you must reduce the maximum deduction amount by multiplying the maximum amount by the percentage of business/investment use determined on an annual basis during the tax year. File state income tax only If you have a short tax year, you must reduce the maximum deduction amount by multiplying the maximum amount by a fraction. File state income tax only The numerator of the fraction is the number of months and partial months in the short tax year and the denominator is 12. File state income tax only Example. File state income tax only On April 15, 2013, Virginia Hart bought and placed in service a new car for $14,500. File state income tax only She used the car only in her business. File state income tax only She files her tax return based on the calendar year. File state income tax only She does not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File state income tax only Under MACRS, a car is 5-year property. File state income tax only Since she placed her car in service on April 15 and used it only for business, she uses the percentages in Table A-1 to figure her MACRS depreciation on the car. File state income tax only Virginia multiplies the $14,500 unadjusted basis of her car by 0. File state income tax only 20 to get her MACRS depreciation of $2,900 for 2013. File state income tax only This $2,900 is below the maximum depreciation deduction of $3,160 for passenger automobiles placed in service in 2013. File state income tax only She can deduct the full $2,900. File state income tax only Electric Vehicles The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. File state income tax only The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table. File state income tax only Owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts later for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans later, for electric vehicles classified as trucks and vans. File state income tax only Maximum Depreciation Deduction For Electric Vehicles Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2006 $8,980 $14,400 $8,650 $5,225 2005 8,880 14,200 8,450 5,125 2004 31,8301 14,300 8,550 5,125 5/06/2003– 12/31/2003 32,0302 14,600 8,750 5,225 1/01/2003– 5/05/2003 22,8803 14,600 8,750 5,225 1If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $8,880. File state income tax only 2If you acquired the vehicle before 5/06/03, the maximum deduction is $22,880. File state income tax only If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File state income tax only 3 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $9,080. File state income tax only Trucks and Vans The maximum depreciation deductions for trucks and vans placed in service after 2002 are higher than those for other passenger automobiles. File state income tax only The maximum deduction amounts for trucks and vans are shown in the following table. File state income tax only Maximum Depreciation Deduction For Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 11,3601 5,300 3,150 1,875 2011 11,2602 5,200 3,150 1,875 2010 11,1603 5,100 3,050 1,875 2009 11,0604 4,900 2,950 1,775 2008 11,1605 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2006 3,260 5,200 3,150 1,875 2005 3,260 5,200 3,150 1,875 2004 10,9106 5,300 3,150 1,875 5/06/2003– 12/31/2003 11,0107 5,400 3,250 1,975 1/01/2003– 5/05/2003 7,9608 5,400 3,250 1,975 1 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,360. File state income tax only 2 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,260. File state income tax only 3 If you elected not to claim any special depreciation allowance or the vehicle is not qualified property, the maximum deduction is $3,160. File state income tax only 4 If you elect not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,060. File state income tax only 5If you elected not to claim any special depreciation allowance for the vehicle or the vehicle is not qualified property, the maximum deduction is $3,160. File state income tax only 6If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, or the maximum deduction is $3,260. File state income tax only 7 If you acquired the vehicle before 5/06/03, the maximum deduction is $7,960. File state income tax only If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File state income tax only 8 If you elected not to claim any special depreciation allowance for the vehicle, the vehicle is not qualified property, or the vehicle is qualified Liberty Zone property, the maximum deduction is $3,360. File state income tax only Depreciation Worksheet for Passenger Automobiles You can use the following worksheet to figure your depreciation deduction using the percentage tables. File state income tax only Then use the information from this worksheet to prepare Form 4562. File state income tax only Depreciation Worksheet for Passenger Automobiles   Part I   1. File state income tax only MACRS system (GDS or ADS)     2. File state income tax only Property class     3. File state income tax only Date placed in service     4. File state income tax only Recovery period     5. File state income tax only Method and convention     6. File state income tax only Depreciation rate (from tables)     7. File state income tax only Maximum depreciation deduction for this year from the appropriate table       8. File state income tax only Business/investment-use percentage       9. File state income tax only Multiply line 7 by line 8. File state income tax only This is your adjusted maximum depreciation deduction       10. File state income tax only Section 179 deduction claimed this year (not more than line 9). File state income tax only Enter -0- if this is not the year you placed the car in service. File state income tax only         Note. File state income tax only  1) If line 10 is equal to line 9, stop here. File state income tax only Your combined section 179 and depreciation deduction (including your special depreciation allowance) is limited to the amount on line 9. File state income tax only  2) If line 10 is less than line 9, complete Part II. File state income tax only   Part II   11. File state income tax only Subtract line 10 from line 9. File state income tax only This is the limit on the amount you can deduct for depreciation (including any special depreciation allowance )       12. File state income tax only Cost or other basis (reduced by any alternative motor vehicle credit 1or credit for electric vehicles 2)       13. File state income tax only Multiply line 12 by line 8. File state income tax only This is your business/investment cost       14. File state income tax only Section 179 deduction claimed in the year you placed the car in service       15. File state income tax only Subtract line 14 from line 13. File state income tax only This is your tentative basis for depreciation       16. File state income tax only Multiply line 15 by . File state income tax only 50 if the 50% special depreciation allowance applies. File state income tax only This is your special depreciation allowance. File state income tax only Enter -0- if this is not the year you placed the car in service, the car is not qualified property, or you elected not to claim a special depreciation allowance       Note 1) If line 16 is equal to line 11, stop here. File state income tax only Your depreciation deduction (including your special depreciation allowance) is limited to the amount on line 11. File state income tax only  2) If line 16 is less than line 11, complete Part III. File state income tax only   Part III   17. File state income tax only Subtract line 16 from 11. File state income tax only This is the limit on the amount you can deduct for MACRS depreciation       18. File state income tax only Subtract line 16 from line 15. File state income tax only This is your basis for depreciation. File state income tax only       19. File state income tax only Multiply line 18 by line 6. File state income tax only This is your tentative MACRS depreciation deduction. File state income tax only       20. File state income tax only Enter the lesser of line 17 or line 19. File state income tax only This is your MACRS depreciation deduction. File state income tax only     1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for your car. File state income tax only 2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount. File state income tax only             Deductions After the Recovery Period If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. File state income tax only If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. File state income tax only You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. File state income tax only The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. File state income tax only See Maximum Depreciation Deduction , earlier. File state income tax only Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied. File state income tax only You cannot claim a depreciation deduction for listed property other than passenger automobiles after the recovery period ends. File state income tax only There is no unrecovered basis at the end of the recovery period because you are considered to have used this property 100% for business and investment purposes during all of the recovery period. File state income tax only Example. File state income tax only In May 2007, you bought and placed in service a car costing $31,500. File state income tax only The car was 5-year property under GDS (MACRS). File state income tax only You did not elect a section 179 deduction and elected not to claim any special depreciation allowance for the car. File state income tax only You used the car exclusively for business during the recovery period (2007 through 2012). File state income tax only You figured your depreciation as shown below. File state income tax only Year Percentage Amount Limit   Allowed 2007 20. File state income tax only 0% $6,300 $2,960   $2,960 2008 32. File state income tax only 0 10,080 4,800   4,800 2009 19. File state income tax only 2 6,048 2,850   2,850 2010 11. File state income tax only 52 3,629 1,675   1,675 2011 11. File state income tax only 52 3,629 1,675   1,675 2012 5. File state income tax only 76 1,814 1,675   1,675 Total   $15,635 At the end of 2012, you had an unrecovered basis of $15,865 ($31,500 − $15,635). File state income tax only If in 2013 and later years you continue to use the car 100% for business, you can deduct each year the lesser of $1,675 or your remaining unrecovered basis. File state income tax only If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. File state income tax only However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the business use had been 100%. File state income tax only For example, if you had used your car 60% for business instead of 100%, your allowable depreciation deductions would have been $9,519 ($15,865 × 60%), but you still would have to reduce your basis by $15,865 to determine your unrecovered basis. File state income tax only Deductions For Passenger Automobiles Acquired in a Trade-in If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in did not occur. File state income tax only Depreciate the part of the new automobile's basis that exceeds its carryover basis (excess basis) as if it were newly placed in service property. File state income tax only This excess basis is the additional cash paid for the new automobile in the trade-in. File state income tax only The depreciation figured for the two components of the basis (carryover basis and excess basis) is subject to a single passenger automobile limit. File state income tax only Special rules apply in determining the passenger automobile limits. File state income tax only These rules and examples are discussed in section 1. File state income tax only 168(i)-6(d)(3) of the regulations. File state income tax only Instead of figuring depreciation for the carryover basis and the excess basis separately, you can elect to treat the old automobile as disposed of and both of the basis components for the new automobile as if placed in service at the time of the trade-in. File state income tax only For more information, including how to make this election, see Election out under Property Acquired in a Like-kind Exchange or Involuntary Conversion in chapter 4 and sections 1. File state income tax only 168(i)-6(i) and 1. File state income tax only 168(i)-6(j) of the regulations. File state income tax only What Records Must Be Kept? You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove your business/investment use with adequate records or with sufficient evidence to support your own statements. File state income tax only For listed property, you must keep records for as long as any recapture can still occur. File state income tax only Recapture can occur in any tax year of the recovery period. File state income tax only Adequate Records To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. File state income tax only You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. File state income tax only However, your records should back up your receipts in an orderly manner. File state income tax only Elements of expenditure or use. File state income tax only   Your records or other documentary evidence must support all the following. File state income tax only The amount of each separate expenditure, such as the cost of acquiring the item, maintenance and repair costs, capital improvement costs, lease payments, and any other expenses. File state income tax only The amount of each business and investment use (based on an appropriate measure, such as mileage for vehicles and time for other listed property), and the total use of the property for the tax year. File state income tax only The date of the expenditure or use. File state income tax only The business or investment purpose for the expenditure or use. File state income tax only   Written documents of your expenditure or use are generally better evidence than oral statements alone. File state income tax only You do not have to keep a daily log. File state income tax only However, some type of record containing the elements of an expenditure or the business or investment use of listed property made at or near the time of the expenditure or use and backed up by other documents is preferable to a statement you prepare later. File state income tax only Timeliness. File state income tax only   You must record the elements of an expenditure or use at the time you have full knowledge of the elements. File state income tax only An expense account statement made from an account book, diary, or similar record prepared or maintained at or near the time of the expenditure or use generally is considered a timely record if, in the regular course of business: The statement is given by an employee to the employer, or The statement is given by an independent contractor to the client or customer. File state income tax only   For example, a log maintained on a weekly basis, that accounts for use during the week, will be considered a record made at or near the time of use. File state income tax only Business purpose supported. File state income tax only   Generally, an adequate record of business purpose must be in the form of a written statement. File state income tax only However, the amount of detail necessary to establish a business purpose depends on the facts and circumstances of each case. File state income tax only A written explanation of the business purpose will not be required if the purpose can be determined from the surrounding facts and circumstances. File state income tax only For example, a salesperson visiting customers on an established sales route will not normally need a written explanation of the business purpose of his or her travel. File state income tax only Business use supported. File state income tax only   An adequate record contains enough information on each element of every business or investment use. File state income tax only The amount of detail required to support the use depends on the facts and circumstances. File state income tax only For example, a taxpayer who uses a truck for both business and personal purposes and whose only business use of the truck is to make customer deliveries on an established route can satisfy the requirement by recording the length of the route, including the total number of miles driven during the tax year and the date of each trip at or near the time of the trips. File state income tax only   Although you generally must prepare an adequate written record, you can prepare a record of the business use of listed property in a computer memory device that uses a logging program. File state income tax only Separate or combined expenditures or uses. File state income tax only   Each use by you normally is considered a separate use. File state income tax only However, you can combine repeated uses as a single item. File state income tax only   Record each expenditure as a separate item. File state income tax only Do not combine it with other expenditures. File state income tax only If you choose, however, you can combine amounts you spent for the use of listed property during a tax year, such as for gasoline or automobile repairs. File state income tax only If you combine these expenses, you do not need to support the business purpose of each expense. File state income tax only Instead, you can divide the expenses based on the total business use of the listed property. File state income tax only   You can account for uses that can be considered part of a single use, such as a round trip or uninterrupted business use, by a single record. File state income tax only For example, you can account for the use of a truck to make deliveries at several locations that begin and end at the business premises and can include a stop at the business in between deliveries by a single record of miles driven. File state income tax only You can account for the use of a passenger automobile by a salesperson for a business trip away from home over a period of time by a single record of miles traveled. File state income tax only Minimal personal use (such as a stop for lunch between two business stops) is not an interruption of business use. File state income tax only Confidential information. File state income tax only   If any of the information on the elements of an expenditure or use is confidential, you do not need to include it in the account book or similar record if you record it at or near the time of the expenditure or use. File state income tax only You must keep it elsewhere and make it available as support to the IRS director for your area on request. File state income tax only Substantial compliance. File state income tax only   If you have not fully supported a particular element of an expenditure or use, but have complied with the adequate records requirement for the expenditure or use to the satisfaction of the IRS director for your area, you can establish this element by any evidence the IRS director for your area deems adequate. File state income tax only   If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied with the adequate records requirement for an element of an expenditure or use, you must establish the element as follows. File state income tax only By your own oral or written statement containing detailed information as to the element. File state income tax only By other evidence sufficient to establish the element. File state income tax only   If the element is the cost or amount, time, place, or date of an expenditure or use, its supporting evidence must be direct evidence, such as oral testimony by witnesses or a written statement setting forth detailed information about the element or the documentary evidence. File state income tax only If the element is the business purpose of an expenditure, its supporting evidence can be circumstantial evidence. File state income tax only Sampling. File state income tax only   You can maintain an adequate record for part of a tax year and use that record to support your business and investment use of listed property for the entire tax year if it can be shown by other evidence that the periods for which you maintain an adequate record are representative of the use throughout the year. File state income tax only Example 1. File state income tax only Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. File state income tax only She uses her automobile for local business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and deliver items to clients. File state income tax only There is no other business use of the automobile, but she and family members also use it for personal purposes. File state income tax only She maintains adequate records for the first 3 months of the year showing that 75% of the automobile use was for business. File state income tax only Subcontractor invoices and paid bills show that her business continued at approximately the same rate for the rest of the year. File state income tax only If there is no change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File state income tax only Example 2. File state income tax only Assume the same facts as in Example 1, except that Denise maintains adequate records during the first week of every month showing that 75% of her use of the automobile is for business. File state income tax only Her business invoices show that her business continued at the same rate during the later weeks of each month so that her weekly records are representative of the automobile's business use throughout the month. File state income tax only The determination that her business/investment use of the automobile for the tax year is 75% rests on sufficient supporting evidence. File state income tax only Example 3. File state income tax only Bill Baker, a sole proprietor and calendar year taxpayer, is a salesman in a large metropolitan area for a company that manufactures household products. File state income tax only For the first 3 weeks of each month, he occasionally uses his own automobile for business travel within the metropolitan area. File state income tax only During these weeks, his business use of the automobile does not follow a consistent pattern. File state income tax only During the fourth week of each month, he delivers all business orders taken during the previous month. File state income tax only The business use of his automobile, as supported by adequate records, is 70% of its total use during that fourth week. File state income tax only The determination based on the record maintained during the fourth week of the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient supporting evidence because his use during that week is not representative of use during other periods. File state income tax only Loss of records. File state income tax only   When you establish that failure to produce adequate records is due to loss of the records through circumstances beyond your control, such as through fire, flood, earthquake, or other casualty, you have the right to support a deduction by reasonable reconstruction of your expenditures and use. File state income tax only How Is Listed Property Information Reported? You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you claim either of the following deductions. File state income tax only Any deduction for a vehicle. File state income tax only A depreciation deduction for any other listed property. File state income tax only If you claim any deduction for a vehicle, you also must provide the information requested in Section B. File state income tax only If you provide the vehicle for your employee's use, the employee must give you this information. File state income tax only If you provide any vehicle for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle. File state income tax only Vehicles used by your employees. File state income tax only   You do not have to complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements. File state income tax only You maintain a written policy statement that prohibits one of the following uses of the vehicles. File state income tax only All personal use including commuting. File state income tax only Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more owners. File state income tax only You treat all use of the vehicles by your employees as personal use. File state income tax only You provide more than five vehicles for use by your employees, and you keep in your records the information on their use given to you by the employees. File state income tax only For demonstrator automobiles provided to full-time salespersons, you maintain a written policy statement that limits the total mileage outside the salesperson's normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store personal possessions. File state income tax only Exceptions. File state income tax only   If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file Form 4562, report information about listed property on that form and not on Form 4562. File state income tax only Also, if you file Schedule C (Form 1040) and are claiming the standard mileage rate or actual vehicle expenses (except depreciation) and you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C and not on Form 4562. File state income tax only Prev  Up  Next   Home   More Online Publications