Rev. Proc. 2014-21 - Rev. Proc. 2014–21
Rev. Proc. 2014–21
SECTION 1. 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 2014, 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 2014, including a separate table of inclusion amounts for lessees of trucks and vans. 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.
SECTION 2. BACKGROUND
.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. 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. 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. This change reflects the higher rate of price inflation for trucks and vans since 1988.
.02 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Under § 1.280F–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. One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased.
SECTION 3. SCOPE
.01 The limitations on depreciation deductions in section 4.01(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 2014, and continue to apply for each taxable year that the passenger automobile remains in service.
.02 The tables in section 4.02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2014. 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. See Rev. Proc. 2009–24, 2009–17 I.R.B. 885, for passenger automobiles first leased during calendar year 2009; Rev. Proc. 2010–18, 2010–09 I.R.B. 427, as amplified and modified by section 4.03 of Rev. Proc. 2011–21, 2011–12 I.R.B. 560, for passenger automobiles first leased during calendar year 2010; Rev. Proc. 2011–21, for passenger automobiles first leased during calendar year 2011; Rev. Proc. 2012–23, 2012–14 I.R.B. 712, for passenger automobiles first leased during calendar year 2012, and Rev. Proc. 2013–21, 2013–12 I.R.B. 660, for passenger automobiles first leased during calendar year 2013.
SECTION 4. APPLICATION
.01 Limitations on Depreciation Deductions for Certain Automobiles.
(1) Amount of the inflation adjustment.
(a) Passenger automobiles (other than trucks or vans). 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. 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. The new car component of the CPI was 115.2 for October 1987 and 144.169 for October 2013. The October 2013 index exceeded the October 1987 index by 28.969. Therefore, the automobile price inflation adjustment for 2014 for passenger automobiles (other than trucks and vans) is 25.1 percent (28.969/115.2 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.251, 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 2014. This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2014.
(b) Trucks and vans. To determine the dollar limitations for trucks and vans first placed in service during calendar year 2014, the Service uses the new truck component of the CPI instead of the new car component. The new truck component of the CPI was 112.4 for October 1987 and 151.877 for October 2013. The October 2013 index exceeded the October 1987 index by 39.477. Therefore, the automobile price inflation adjustment for 2014 for trucks and vans is 35.1 percent (39.477/112.4 x 100%). The dollar limitations in § 280F(a) are multiplied by a factor of 0.351, 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. This adjustment applies to all trucks and vans that are first placed in service in calendar year 2014.
(2) Amount of the limitation. Tables 1 and 2 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2014. 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 2014.
| REV. PROC. 2014–21 TABLE 1 | |
|---|---|
| DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2014 | |
| --- | --- |
| Tax Year | Amount |
| --- | --- |
| 1st Tax Year | $ 3,160 |
| 2nd Tax Year | $ 5,100 |
| 3rd Tax Year | $ 3,050 |
| Each Succeeding Year | $ 1,875 |
| REV. PROC. 2014–21 TABLE 2 | |
|---|---|
| DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2014 | |
| --- | --- |
| Tax Year | Amount |
| --- | --- |
| 1st Tax Year | $ 3,460 |
| 2nd Tax Year | $ 5,500 |
| 3rd Tax Year | $ 3,350 |
| Each Succeeding Year | $ 1,975 |
.02 Inclusions in Income of Lessees of Passenger Automobiles.
A taxpayer must follow the procedures in § 1.280F–7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2014. In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 3 of this revenue procedure, while lessees of trucks and vans should use Table 4 of this revenue procedure.
| REV. PROC. 2014–21 TABLE 4 | ||||||
|---|---|---|---|---|---|---|
| DOLLAR AMOUNTS FOR TRUCKS AND VANS | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2014 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Fair Market Value of Truck or Van | Tax Year During Lease | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Over | Not Over | 1st | 2nd | 3rd | 4th | 5th & later |
| --- | --- | --- | --- | --- | --- | --- |
| $19,000 | $19,500 | 2 | 4 | 5 | 7 | 8 |
| 19,500 | 20,000 | 2 | 5 | 7 | 8 | 10 |
| 20,000 | 20,500 | 3 | 6 | 8 | 10 | 12 |
| 20,500 | 21,000 | 3 | 7 | 10 | 11 | 14 |
| 21,000 | 21,500 | 3 | 8 | 11 | 14 | 15 |
| 21,500 | 22,000 | 4 | 9 | 12 | 15 | 18 |
| 22,000 | 23,000 | 5 | 10 | 15 | 17 | 21 |
| 23,000 | 24,000 | 5 | 12 | 18 | 21 | 24 |
| 24,000 | 25,000 | 6 | 14 | 20 | 25 | 28 |
| 25,000 | 26,000 | 7 | 16 | 23 | 28 | 32 |
| 26,000 | 27,000 | 8 | 18 | 26 | 31 | 36 |
| 27,000 | 28,000 | 9 | 20 | 28 | 35 | 40 |
| 28,000 | 29,000 | 10 | 21 | 32 | 38 | 44 |
| 29,000 | 30,000 | 11 | 23 | 35 | 41 | 48 |
| 30,000 | 31,000 | 11 | 26 | 37 | 45 | 52 |
| 31,000 | 32,000 | 12 | 27 | 41 | 48 | 56 |
| 32,000 | 33,000 | 13 | 29 | 43 | 52 | 60 |
| 33,000 | 34,000 | 14 | 31 | 46 | 55 | 64 |
| 34,000 | 35,000 | 15 | 33 | 49 | 58 | 68 |
| 35,000 | 36,000 | 16 | 35 | 51 | 62 | 72 |
| 36,000 | 37,000 | 17 | 37 | 54 | 65 | 76 |
| 37,000 | 38,000 | 18 | 38 | 58 | 69 | 79 |
| 38,000 | 39,000 | 18 | 41 | 60 | 72 | 83 |
| 39,000 | 40,000 | 19 | 43 | 63 | 75 | 87 |
| 40,000 | 41,000 | 20 | 44 | 66 | 79 | 91 |
| 41,000 | 42,000 | 21 | 46 | 69 | 82 | 95 |
| 42,000 | 43,000 | 22 | 48 | 72 | 85 | 99 |
| 43,000 | 44,000 | 23 | 50 | 74 | 89 | 103 |
| 44,000 | 45,000 | 24 | 52 | 77 | 93 | 106 |
| 45,000 | 46,000 | 24 | 54 | 80 | 96 | 111 |
| 46,000 | 47,000 | 25 | 56 | 83 | 99 | 115 |
| 47,000 | 48,000 | 26 | 58 | 86 | 102 | 119 |
| 48,000 | 49,000 | 27 | 60 | 88 | 106 | 123 |
| 49,000 | 50,000 | 28 | 62 | 91 | 109 | 127 |
| 50,000 | 51,000 | 29 | 63 | 95 | 113 | 130 |
| 51,000 | 52,000 | 30 | 65 | 97 | 117 | 134 |
| 52,000 | 53,000 | 31 | 67 | 100 | 120 | 138 |
| 53,000 | 54,000 | 31 | 69 | 103 | 123 | 142 |
| 54,000 | 55,000 | 32 | 71 | 106 | 126 | 146 |
| 55,000 | 56,000 | 33 | 73 | 108 | 130 | 150 |
| 56,000 | 57,000 | 34 | 75 | 111 | 133 | 154 |
| 57,000 | 58,000 | 35 | 77 | 114 | 137 | 157 |
| 58,000 | 59,000 | 36 | 79 | 116 | 141 | 161 |
| 59,000 | 60,000 | 37 | 80 | 120 | 144 | 165 |
| 60,000 | 62,000 | 38 | 84 | 123 | 149 | 172 |
| 62,000 | 64,000 | 40 | 87 | 130 | 155 | 180 |
| 64,000 | 66,000 | 41 | 91 | 136 | 162 | 187 |
| 66,000 | 68,000 | 43 | 95 | 141 | 169 | 195 |
| 68,000 | 70,000 | 45 | 99 | 146 | 176 | 203 |
| 70,000 | 72,000 | 47 | 102 | 153 | 182 | 211 |
| 72,000 | 74,000 | 48 | 107 | 158 | 189 | 219 |
| 74,000 | 76,000 | 50 | 110 | 164 | 196 | 227 |
| 76,000 | 78,000 | 52 | 114 | 169 | 203 | 235 |
| 78,000 | 80,000 | 54 | 118 | 175 | 209 | 243 |
| 80,000 | 85,000 | 57 | 124 | 185 | 222 | 256 |
| 85,000 | 90,000 | 61 | 134 | 199 | 239 | 276 |
| 90,000 | 95,000 | 65 | 144 | 213 | 256 | 295 |
| 95,000 | 100,000 | 70 | 153 | 227 | 273 | 315 |
| 100,000 | 110,000 | 76 | 168 | 248 | 298 | 345 |
| 110,000 | 120,000 | 85 | 187 | 277 | 332 | 383 |
| 120,000 | 130,000 | 93 | 206 | 305 | 366 | 423 |
| 130,000 | 140,000 | 102 | 225 | 334 | 400 | 462 |
| 140,000 | 150,000 | 111 | 244 | 362 | 434 | 501 |
| 150,000 | 160,000 | 120 | 263 | 390 | 468 | 541 |
| 160,000 | 170,000 | 128 | 282 | 419 | 502 | 580 |
| 170,000 | 180,000 | 137 | 301 | 447 | 536 | 619 |
| 180,000 | 190,000 | 146 | 320 | 475 | 571 | 658 |
| 190,000 | 200,000 | 154 | 339 | 504 | 604 | 698 |
| 200,000 | 210,000 | 163 | 358 | 532 | 639 | 736 |
| 210,000 | 220,000 | 172 | 377 | 561 | 672 | 776 |
| 220,000 | 230,000 | 180 | 397 | 589 | 706 | 815 |
| 230,000 | 240,000 | 189 | 416 | 617 | 740 | 854 |
| 240,000 | and over | 198 | 435 | 645 | 774 | 894 |
| REV. PROC. 2014–21 TABLE 3 | ||||||
|---|---|---|---|---|---|---|
| DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2014 | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Fair Market Value of Passenger Automobile | Tax Year During Lease | |||||
| --- | --- | --- | --- | --- | --- | --- |
| Over | Not Over | 1st | 2nd | 3rd | 4th | 5th & later |
| --- | --- | --- | --- | --- | --- | --- |
| $18,500 | $19,000 | 3 | 5 | 8 | 10 | 11 |
| 19,000 | 19,500 | 3 | 6 | 10 | 11 | 13 |
| 19,500 | 20,000 | 3 | 8 | 11 | 13 | 14 |
| 20,000 | 20,500 | 4 | 8 | 13 | 14 | 17 |
| 20,500 | 21,000 | 4 | 9 | 14 | 17 | 18 |
| 21,000 | 21,500 | 5 | 10 | 15 | 18 | 21 |
| 21,500 | 22,000 | 5 | 11 | 17 | 20 | 22 |
| 22,000 | 23,000 | 6 | 13 | 18 | 23 | 25 |
| 23,000 | 24,000 | 7 | 14 | 22 | 26 | 29 |
| 24,000 | 25,000 | 8 | 16 | 25 | 29 | 33 |
| 25,000 | 26,000 | 8 | 19 | 27 | 32 | 38 |
| 26,000 | 27,000 | 9 | 20 | 31 | 35 | 42 |
| 27,000 | 28,000 | 10 | 22 | 33 | 40 | 45 |
| 28,000 | 29,000 | 11 | 24 | 36 | 43 | 49 |
| 29,000 | 30,000 | 12 | 26 | 39 | 46 | 53 |
| 30,000 | 31,000 | 13 | 28 | 41 | 50 | 57 |
| 31,000 | 32,000 | 14 | 30 | 44 | 53 | 61 |
| 32,000 | 33,000 | 14 | 32 | 47 | 56 | 65 |
| 33,000 | 34,000 | 15 | 34 | 50 | 59 | 69 |
| 34,000 | 35,000 | 16 | 36 | 52 | 64 | 72 |
| 35,000 | 36,000 | 17 | 38 | 55 | 67 | 76 |
| 36,000 | 37,000 | 18 | 39 | 59 | 70 | 80 |
| 37,000 | 38,000 | 19 | 41 | 61 | 74 | 84 |
| 38,000 | 39,000 | 20 | 43 | 64 | 77 | 88 |
| 39,000 | 40,000 | 21 | 45 | 67 | 80 | 92 |
| 40,000 | 41,000 | 21 | 47 | 70 | 84 | 96 |
| 41,000 | 42,000 | 22 | 49 | 73 | 87 | 100 |
| 42,000 | 43,000 | 23 | 51 | 75 | 91 | 104 |
| 43,000 | 44,000 | 24 | 53 | 78 | 94 | 108 |
| 44,000 | 45,000 | 25 | 55 | 81 | 97 | 112 |
| 45,000 | 46,000 | 26 | 56 | 84 | 101 | 116 |
| 46,000 | 47,000 | 27 | 58 | 87 | 104 | 120 |
| 47,000 | 48,000 | 28 | 60 | 90 | 107 | 124 |
| 48,000 | 49,000 | 28 | 62 | 93 | 111 | 127 |
| 49,000 | 50,000 | 29 | 64 | 96 | 114 | 131 |
| 50,000 | 51,000 | 30 | 66 | 98 | 118 | 135 |
| 51,000 | 52,000 | 31 | 68 | 101 | 121 | 139 |
| 52,000 | 53,000 | 32 | 70 | 104 | 124 | 143 |
| 53,000 | 54,000 | 33 | 72 | 106 | 128 | 147 |
| 54,000 | 55,000 | 34 | 74 | 109 | 131 | 151 |
| 55,000 | 56,000 | 34 | 76 | 112 | 135 | 155 |
| 56,000 | 57,000 | 35 | 78 | 115 | 138 | 159 |
| 57,000 | 58,000 | 36 | 80 | 118 | 141 | 163 |
| 58,000 | 59,000 | 37 | 81 | 121 | 145 | 167 |
| 59,000 | 60,000 | 38 | 83 | 124 | 148 | 171 |
| 60,000 | 62,000 | 39 | 86 | 128 | 153 | 177 |
| 62,000 | 64,000 | 41 | 90 | 134 | 159 | 185 |
| 64,000 | 66,000 | 43 | 94 | 139 | 167 | 192 |
| 66,000 | 68,000 | 44 | 98 | 145 | 173 | 201 |
| 68,000 | 70,000 | 46 | 102 | 150 | 180 | 209 |
| 70,000 | 72,000 | 48 | 105 | 156 | 188 | 216 |
| 72,000 | 74,000 | 50 | 109 | 162 | 194 | 224 |
| 74,000 | 76,000 | 51 | 113 | 168 | 200 | 232 |
| 76,000 | 78,000 | 53 | 117 | 173 | 208 | 239 |
| 78,000 | 80,000 | 55 | 120 | 179 | 215 | 247 |
| 80,000 | 85,000 | 58 | 127 | 189 | 226 | 261 |
| 85,000 | 90,000 | 62 | 137 | 203 | 243 | 281 |
| 90,000 | 95,000 | 67 | 146 | 217 | 260 | 301 |
| 95,000 | 100,000 | 71 | 156 | 231 | 277 | 320 |
| 100,000 | 110,000 | 77 | 170 | 253 | 303 | 349 |
| 110,000 | 120,000 | 86 | 189 | 281 | 337 | 389 |
| 120,000 | 130,000 | 95 | 208 | 310 | 370 | 428 |
| 130,000 | 140,000 | 103 | 228 | 337 | 405 | 467 |
| 140,000 | 150,000 | 112 | 247 | 366 | 438 | 507 |
| 150,000 | 160,000 | 121 | 266 | 394 | 473 | 545 |
| 160,000 | 170,000 | 130 | 284 | 423 | 507 | 585 |
| 170,000 | 180,000 | 138 | 304 | 451 | 541 | 624 |
| 180,000 | 190,000 | 147 | 323 | 479 | 575 | 663 |
| 190,000 | 200,000 | 156 | 342 | 507 | 609 | 703 |
| 200,000 | 210,000 | 164 | 361 | 536 | 643 | 742 |
| 210,000 | 220,000 | 173 | 380 | 565 | 676 | 781 |
| 220,000 | 230,000 | 182 | 399 | 593 | 710 | 821 |
| 230,000 | 240,000 | 190 | 418 | 622 | 744 | 860 |
| 240,000 | and over | 199 | 437 | 650 | 778 | 899 |
SECTION 5. EFFECTIVE DATE
This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2014.
SECTION 6. DRAFTING INFORMATION
The principal author of this revenue procedure is Bernard P. Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Harvey at (202) 317-7005 (not a toll-free Number).