|
SECTION 1. PURPOSE
This revenue procedure provides: (1)
limitations on depreciation deductions for
owners of passenger automobiles first
placed in service during calendar year
2002, including separate limitations on
passenger automobiles designed to be
propelled primarily by electricity and
built by an original equipment manufacturer
(electric automobiles); (2) the
amounts to be included in income by lessees
of passenger automobiles first leased
during calendar year 2002, including
separate inclusion amounts for electric
automobiles; and (3) the maximum allowable
value of employer-provided automobiles
first made available to employees
for personal use in calendar year 2002 for
which the vehicle cents-per-mile valuation
rule provided under § 1.61–21(e) of
the Income
Tax Regulations may be
applicable. 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. The maximum allowable automobile
value for applying the vehicle cents-per-mile
valuation rule reflects the automobile price
inflation adjustment of §
280F(d)(7) as required by § 1.61–21(e)(1)(iii)(A).
SECTION 2. BACKGROUND
For owners of automobiles, § 280F(a) imposes
dollar limitations on the depreciation deduction
for the year that the automobile
is placed in service and each succeeding
year. In the case of electric automobiles
placed in service after August
5, 1997, and before January 1, 2005,
§ 280F(a)(1)(C) requires tripling of these
limitation amounts. Section 280F(d)(7)
requires the amounts allowable as
depreciation deductions to be increased
by a price inflation adjustment amount
for passenger automobiles placed in
service after 1988.
For
leased automobiles, § 280F(c)
requires
a reduction in the deduction allowed
to the lessee of the automobile. The
reduction must be substantially equivalent
to the limitations on the depreciation deductions
imposed on owners of automobiles.
Under § 1.280F–7(a), this reduction
requires the lessees to include in
gross income an inclusion amount determined
by applying a formula to the amount
obtained from a table. There is a table
for lessees of electric automobiles and
a table for all other passenger automobiles. Each
table shows inclusion amounts
for a range of fair market values for
each tax year after the automobile is first
leased.
For automobiles first provided by employers
to employees that meet the requirements
of § 1.61–21(e)(1), the value
to the employee of the use of the automobile
may be determined under the vehicle
cents-per-mile valuation rule of §
1.61–21(e). Section 1.61–21(e)(1)(iii) (A)
provides that for an automobile first made
available after 1988 to any employee
of the employer for personal use,
the value of the use of the automobile may
not be determined under the vehicle
cents-per-mile valuation rule for a calendar
year if the fair market value of the
automobile (determined pursuant to §
1.61–21(d)(5)(i) through (iv)) on the first
date the automobile is made available to
the employee exceeds $12,800 as adjusted
by § 280F(d)(7).
SECTION 3. SCOPE AND OBJECTIVE
01. The limitations on depreciation deductions
in section 4.02 of this revenue procedure
apply to automobiles (other
than leased
automobiles)
that are placed in
service in calendar year 2002 and continue to
apply for each tax year that the automobile
remains in service.
02. The tables in section 4.03 of this revenue
procedure apply to leased automobiles for
which the lease term begins in
calendar year 2002. Lessees of such automobiles
must use these tables to determine
the inclusion amount for each tax
year during which the automobile is leased
03. See Rev. Proc. 96–25 (1996–1C.B. 681) for
information on determining inclusion
amounts for automobiles first leased
before January 1, 1997; Rev. Proc. 97–20
(1997–1 C.B. 647) for automobiles first
leased during calendar year 1997, including
electric automobiles
first leased on
or after January 1, 1997, and before August
6, 1997; Rev. Proc. 98–24 (1998–1 C.B. 663) for electric automobiles
first
leased after August 5, 1997, and before
January 1, 1998; Rev. Proc. 98–30 (1998–1 C.B. 930) for all automobiles
first
leased in calendar year 1998; Rev. Proc.
99–14 (1999–1 C.B. 413) for all automobiles
first leased in calendar year 1999;
Rev. Proc. 2000–18 (2000–9 I.R.B. 722)
for all automobiles first leased in calendar
year 2000, and Rev. Proc. 2001–19
(2001–9 I.R.B. 732) for all automobiles first
leased in calendar year 2001.
04. The maximum fair market value figure
in section 4.04(2) of this revenue procedure
applies to employer-provided automobiles
first made available to any employee
for personal use in calendar
year
2002.See
Rev.
Proc. 97–20, for the
maximum
fair market value figure for automobiles
first made available in calendar year
1997; Rev. Proc. 98–30, for the maximum
fair market value figure for automobiles
first made available in calendar year
1998; Rev. Proc. 99–14, for the maximum
fair market value figure for automobiles
first made available in calendar year
1999; Rev. Proc. 2000–18, for the
maximum fair market value figure for automobiles
first made available in calendar year
2000; and Rev. Proc. 2001–19, for
the maximum fair market value figure for automobiles
first made available in calendar
year 2001.
SECTION 4. APPLICATION
01. A taxpayer placing an automobile in
service for the first time during calendar year
2002 is limited to the depreciation deduction
shown in Table 1 of section 4.02(2)
of this revenue procedure or, in
the case of an electric automobile, Table
2 of this revenue procedure.
A taxpayer first
leasing an automobile in calendar year
2002 must determine the inclusion amount
that is added to gross
income using
Table 3 of section 4.03 of this revenue procedure
or, in the case of an electric automobile,
Table 4 of this revenue procedure.
In addition, the procedures of §
1.280F–7(a) must be followed. An employer
providing an automobile for the first
time in calendar year 2002 for the personal
use of any employee may determine the
value of the use of the automobile by using
the cents-per-mile valuation rule
in § 1.61–21(e) if the fair market value
of the automobile does not exceed the
amount specified
in section 4.04(2) of this
revenue procedure. If the fair market value
of the automobile exceeds the amount
specified in section
4.04(2) of this
revenue procedure, the employer may determine
the value of the use of the automobile
under the general valuation rules
of § 1.61–21(b) or under the special valuation
rules of § 1.61–21(d) (Automobile lease
valuation) or § 1.61–21(f) (Commuting
valuation) if the applicable requirements
are met.
02.
Limitations on
Depreciation
Deductions
for Certain
Automobiles.
(1)Amount of the
Inflation Adjustment.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. The term "CPI automobile component"
is defined in § 280F(d)(7)(B)(ii)
as the "automobile
component″ of
the Consumer Price Index for all Urban
Consumers published by theDepartment
of Labor (the CPI).The
new car
component of the CPI was 115.2 for October
1987 and 137.7 for October 2001.
The October 2001 index exceeded the
October
1987 index by 22.5. The
Internal
Revenue Service has, therefore, determined
that the automobile price inflation
adjustment
for 2002 is 19.53125
percent
(22.5/115.2 x 100%). This adjustment is
applicable to all automobiles that are
first placed in service
in calendar year 2002.
The dollar limitations in § 280F(a) must
therefore be multiplied by a factor of
0.1953125, 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 electric automobiles)
for calendar year 2002. To determine
the dollar limitationsapplicable to
an electric automobile first placed
in service during calendar year 2002,
the dollar limitations in § 280F(a)are
tripled in
accordance with
§
280F(a)(1)(C) and are then multiplied by
a factor of 0.1953125; the resulting increases,
after rounding to thenearest
$100,
are added to the tripled 1988 limitations to
give the depreciation limitations for
calendar year 2002.
(2)
Amount of the
Limitation. For automobiles
(other than electric automobiles) placed
in service in calendar year 2002,
Table 1 of this
revenue procedure contains
the dollar amount of the depreciation limitations
for each tax year. For electric
automobiles
placed
in service in calendar
year 2002, Table 2 of this revenueprocedure
contains these amounts.
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REV. PROC. 2002–14 TABLE 1
DEPRECIATION LIMITATIONS FOR AUTOMOBILES
(OTHER THAN ELECTRIC AUTOMOBILES)
FIRST PLACED IN SERVICE IN CALENDAR YEAR 2002 |
| Tax
Year |
Amount |
| 1st Tax
Year |
$3,060 |
| 2nd Tax
Year |
$4,900 |
| 3rd Tax Year |
$2,950 |
| Each
Succeeding Year |
$1,775 |
|
|
|
REV. PROC. 2002–14 TABLE 2
DEPRECIATION LIMITATIONS FOR ELECTRIC AUTOMOBILES
FIRST PLACED IN SERVICE IN CALENDAR YEAR 2002 |
| Tax
Year |
Amount |
| 1st Tax Year |
$ 9,180 |
| 2nd Tax Year |
$14,700 |
| 3rd Tax Year |
$ 8,750 |
| Each
Succeeding Year |
$ 5,325 |
03.
Inclusions
in Income of Lessees of Automobiles .
The inclusion amounts for automobiles first leased in calendar year
2002 are calculated under the procedures described in
§ 1.280F–7(a). Lessees of automobiles other than electric
automobiles should use Table 3 of this revenue procedure in applying
these procedures, while lessees of electric automobiles should use
Table 4 of this revenue procedure.
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REV. PROC. 2002–14 TABLE 3
DOLLAR AMOUNTS FOR AUTOMOBILES (OTHER THAN
ELECTRIC AUTOMOBILES)
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2002 |
|
Fair Market Value
of Automobile |
Tax
Year During Lease |
| Over |
Not Over |
1st |
2nd |
3rd |
4th |
5th and
Later |
| $15,500 |
15,800 |
2 |
3 |
5 |
6 |
6 |
| 15,800 |
16,100 |
3 |
7 |
9 |
11 |
13 |
| 16,100 |
16,400 |
4 |
10 |
14 |
17 |
19 |
| 16,400 |
16,700 |
6 |
13 |
18 |
22 |
26 |
| 16,700 |
17,000 |
7 |
16 |
23 |
28 |
31 |
| 17,000 |
17,500 |
9 |
20 |
29 |
35 |
40 |
| 17,500 |
18,000 |
11 |
25 |
37 |
44 |
50 |
| 18,000 |
18,500 |
14 |
30 |
44 |
53 |
61 |
| 18,500 |
19,000 |
16 |
35 |
52 |
62 |
72 |
| 19,500 |
20,000 |
21 |
45 |
67 |
80 |
93 |
| 20,000 |
20,500 |
23 |
50 |
75 |
89 |
103 |
| 20,500 |
21,000 |
25 |
56 |
82 |
98 |
114 |
| 21,000 |
21,500 |
28 |
60 |
90 |
108 |
123 |
| 21,500 |
22,000 |
30 |
66 |
97 |
117 |
134 |
| 22,000 |
23,000 |
33 |
74 |
108 |
130 |
150 |
| 23,000 |
24,000 |
38 |
84 |
123 |
149 |
171 |
| 24,000 |
25,000 |
43 |
94 |
139 |
166 |
192 |
| 25,000 |
26,000 |
47 |
104 |
154 |
185 |
213 |
| 26,000 |
27,000 |
52 |
114 |
169 |
203 |
234 |
| 27,000 |
28,000 |
57 |
124 |
185 |
220 |
255 |
| 28,000 |
29,000 |
61 |
135 |
199 |
239 |
276 |
| 29,000 |
30,000 |
66 |
145 |
214 |
258 |
296 |
| 30,000 |
31,000 |
71 |
155 |
230 |
275 |
318 |
| 31,000 |
32,000 |
75 |
165 |
245 |
294 |
338 |
| 32,000 |
33,000 |
80 |
175 |
260 |
312 |
360 |
| 33,000 |
34,000 |
85 |
185 |
276 |
329 |
381 |
| 34,000 |
35,000 |
89 |
196 |
290 |
348 |
402 |
| 35,000 |
36,000 |
94 |
206 |
305 |
367 |
422 |
| 36,000 |
37,000 |
99 |
216 |
321 |
384 |
443 |
| 37,000 |
38,000 |
103 |
226 |
336 |
403 |
464 |
| 38,000 |
39,000 |
108 |
236 |
351 |
421 |
485 |
| 39,000 |
40,000 |
112 |
247 |
366 |
439 |
506 |
| 40,000 |
41,000 |
117 |
257 |
381 |
457 |
527 |
| 41,000 |
42,000 |
122 |
267 |
396 |
475 |
549 |
| 42,000 |
43,000 |
126 |
278 |
411 |
493 |
570 |
| 43,000 |
44,000 |
131 |
288 |
426 |
512 |
590 |
| 44,000 |
45,000 |
136 |
298 |
441 |
530 |
611 |
| 45,000 |
46,000 |
140 |
308 |
457 |
548 |
632 |
| 46,000 |
47,000 |
145 |
318 |
472 |
566 |
653 |
| 47,000 |
48,000 |
150 |
328 |
487 |
584 |
674 |
| 48,000 |
49,000 |
154 |
339 |
502 |
602 |
695 |
| 49,000 |
50,000 |
159 |
349 |
517 |
620 |
717 |
| 50,000 |
51,000 |
164 |
359 |
532 |
639 |
737 |
| 51,000 |
52,000 |
168 |
369 |
548 |
657 |
758 |
| 52,000 |
53,000 |
173 |
379 |
563 |
675 |
779 |
| 53,000 |
54,000 |
177 |
390 |
578 |
693 |
800 |
| 54,000 |
55,000 |
182 |
400 |
593 |
711 |
821 |
| 55,000 |
56,000 |
187 |
410 |
608 |
729 |
842 |
| 56,000 |
57,000 |
191 |
420 |
624 |
747 |
863 |
| 57,000 |
58,000 |
196 |
430 |
639 |
766 |
883 |
| 58,000 |
59,000 |
201 |
440 |
654 |
784 |
905 |
| 59,000 |
60,000 |
205 |
451 |
669 |
802 |
925 |
| 60,000 |
62,000 |
212 |
466 |
692 |
829 |
957 |
| 62,000 |
64,000 |
222 |
486 |
722 |
866 |
999 |
| 64,000 |
66,000 |
231 |
507 |
752 |
902 |
1,041 |
| 66,000 |
68,000 |
240 |
527 |
783 |
938 |
1,083 |
| 68,000 |
70,000 |
250 |
547 |
813 |
974 |
1,125 |
| 70,000 |
72,000 |
259 |
568 |
843 |
1,011 |
1,166 |
| 72,000 |
74,000 |
268 |
589 |
873 |
1,047 |
1,208 |
| 74,000 |
76,000 |
277 |
609 |
904 |
1,083 |
1,250 |
| 76,000 |
78,000 |
287 |
629 |
934 |
1,120 |
1,292 |
| 78,000 |
80,000 |
296 |
650 |
964 |
1,156 |
1,334 |
| 80,000 |
85,000 |
312 |
686 |
1,017 |
1,219 |
1,408 |
| 85,000 |
90,000 |
335 |
737 |
1,092 |
1,311 |
1,512 |
| 90,000 |
95,000 |
359 |
787 |
1,169 |
1,401 |
1,617 |
| 95,000 |
100,000 |
382 |
838 |
1,245 |
1,491 |
1,722 |
| 100,000 |
110,000 |
417 |
915 |
1,358 |
1,627 |
1,880 |
| 110,000 |
120,000 |
463 |
1,017 |
1,509 |
1,810 |
2,089 |
| 120,000 |
130,000 |
510 |
1,119 |
1,660 |
1,991 |
2,299 |
| 130,000 |
140,000 |
556 |
1,221 |
1,812 |
2,172 |
2,509 |
| 140,000 |
150,000 |
603 |
1,323 |
1,963 |
2,354 |
2,718 |
| 150,000 |
160,000 |
649 |
1,425 |
2,115 |
2,535 |
2,928 |
| 160,000 |
170,000 |
696 |
1,527 |
2,266 |
2,717 |
3,137 |
| 170,000 |
180,000 |
742 |
1,629 |
2,418 |
2,898 |
3,347 |
| 180,000 |
190,000 |
789 |
1,731 |
2,569 |
3,080 |
3,556 |
| 190,000 |
200,000 |
835 |
1,833 |
2,720 |
3,262 |
3,766 |
| 200,000 |
210,000 |
881 |
1,935 |
2,872 |
3,443 |
3,976 |
| 210,000 |
220,000 |
928 |
2,037 |
3,023 |
3,625 |
4,185 |
| 220,000 |
230,000 |
974 |
2,139 |
3,175 |
3,806 |
4,395 |
| 230,000 |
240,000 |
1,021 |
2,241 |
3,326 |
3,988 |
4,604 |
| 240,000 |
250,000 |
1,067 |
2,343 |
3,478 |
4,169 |
4,814 |
| |
|
|
|
|
|
|
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REV. PROC. 2002–14 TABLE 4
DOLLAR AMOUNTS FOR ELECTRIC AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2002 |
|
Fair Market Value
of Automobile |
Tax Year
During Lease |
| Over |
Not Over |
1st |
2nd |
3rd |
4th |
5th and
Later |
| $46,000 |
47,000 |
3 |
6 |
10 |
11 |
12 |
| 47,000 |
48,000 |
7 |
16 |
26 |
29 |
33 |
| 48,000 |
49,000 |
12 |
26 |
41 |
47 |
54 |
| 49,000 |
50,000 |
17 |
36 |
56 |
66 |
74 |
| 50,000 |
51,000 |
21 |
47 |
71 |
83 |
96 |
| 51,000 |
52,000 |
26 |
57 |
86 |
102 |
117 |
| 52,000 |
53,000 |
31 |
67 |
101 |
120 |
138 |
| 53,000 |
54,000 |
35 |
77 |
117 |
138 |
159 |
| 54,000 |
55,000 |
40 |
87 |
132 |
156 |
180 |
| 55,000 |
56,000 |
45 |
98 |
146 |
174 |
201 |
| 56,000 |
57,000 |
49 |
108 |
161 |
193 |
222 |
| 57,000 |
58,000 |
54 |
118 |
177 |
211 |
242 |
| 58,000 |
59,000 |
59 |
128 |
192 |
229 |
264 |
| 59,000 |
60,000 |
63 |
139 |
206 |
248 |
284 |
| 60,000 |
62,000 |
70 |
154 |
229 |
275 |
316 |
| 62,000 |
64,000 |
79 |
174 |
260 |
311 |
358 |
| 64,000 |
66,000 |
89 |
195 |
290 |
347 |
400 |
| 66,000 |
68,000 |
98 |
215 |
320 |
384 |
442 |
| 68,000 |
70,000 |
107 |
236 |
350 |
420 |
484 |
| 70,000 |
72,000 |
117 |
256 |
381 |
456 |
525 |
| 72,000 |
74,000 |
126 |
276 |
411 |
493 |
567 |
| 74,000 |
76,000 |
135 |
297 |
441 |
529 |
609 |
| 76,000 |
78,000 |
145 |
317 |
472 |
564 |
652 |
| 78,000 |
80,000 |
154 |
337 |
502 |
602 |
693 |
| 80,000 |
85,000 |
170 |
373 |
555 |
665 |
767 |
| 85,000 |
90,000 |
193 |
424 |
631 |
756 |
871 |
| 90,000 |
95,000 |
217 |
475 |
706 |
847 |
976 |
| 95,000 |
100,000 |
240 |
526 |
782 |
937 |
1,081 |
| 100,000 |
110,000 |
275 |
602 |
896 |
1,073 |
1,239 |
| 110,000 |
120,000 |
321 |
705 |
1,047 |
1,255 |
1,448 |
| 120,000 |
130,000 |
368 |
806 |
1,199 |
1,436 |
1,658 |
| 130,000 |
140,000 |
414 |
909 |
1,350 |
1,617 |
1,868 |
| 140,000 |
150,000 |
460 |
1,011 |
1,501 |
1,800 |
2,076 |
| 150,000 |
160,000 |
507 |
1,113 |
1,652 |
1,981 |
2,287 |
| 160,000 |
170,000 |
553 |
1,215 |
1,804 |
2,163 |
2,496 |
| 170,000 |
180,000 |
600 |
1,317 |
1,955 |
2,344 |
2,706 |
| 180,000 |
190,000 |
646 |
1,419 |
2,107 |
2,525 |
2,916 |
| 190,000 |
200,000 |
693 |
1,521 |
2,258 |
2,707 |
3,125 |
| 200,000 |
210,000 |
739 |
1,623 |
2,410 |
2,888 |
3,335 |
| 210,000 |
220,000 |
786 |
1,725 |
2,561 |
3,070 |
3,544 |
| 220,000 |
230,000 |
832 |
1,827 |
2,712 |
3,252 |
3,754 |
| 230,000 |
240,000 |
879 |
1,929 |
2,863 |
3,434 |
3,963 |
| 240,000 |
250,000 |
925 |
2,031 |
3,015 |
3,615 |
4,17 |
04. Maximum
Automobile Value for
Using
the Cents-per-mile Valuation Rule.
(1) Amount of
Adjustment . Under §
1.61–21(e)(1)(iii)(A), the limitation on
the
fair market value of an employer
provided
automobile
first made available to
any employee for personal use after 1988
is to be adjusted in accordance with §
280F(d)(7). Accordingly, the 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. See ,
section 4.02(1)
of this revenue procedure. The new
car component
of
the CPI was 115.2
for
October 1987 and 137.7 for October 2000.
The October 2000 index exceeded the
October 1987 index by 22.5. The Internal
Revenue Service has, therefore,
determined
that the adjustment for 2002
is
19.53125 percent (22.5/115.2 x 100%). This
adjustment is applicable to all employer-provided
automobiles first made
available to any employee for personal use
in calendar year 2002. The maximum
fair market value specified in §
1.61–21(e)(1)(iii)(A) must therefore
be
multiplied
by a factor of 0.1953125, and the
resulting increase, after rounding to the
nearest $100, is added to $12,800 to
give
the
maximum value for calendar
year
2002.
(2)
The
Maximum Automobile Value .
For automobiles
first made available in calendar year 2002 to any employee of the
employer for personal use, the vehicle cents-per-mile
valuation rule may be applicable
if the fair market value of the automobile
on the date it is first made available
does not exceed $15,300.
SECTION
5. EFFECTIVE DATE
This revenue procedure applies to automobiles (other
than leased automobiles) that
are first placed in service during calendar
year 2002, to leased automobiles that
are first leased during calendar year
2002, and to employer-provided automobiles
first made available to employees
for personal use in calendar year 2002.
DRAFTING
INFORMATION
The principal author of this revenue procedure
is Bernard P. Harvey of the Office of the Associate Chief Counsel (Passthroughs
and Special Industries). For further information regarding the
depreciation limitations and lessee inclusion amounts in this revenue
procedure, contact Mr. Harvey at (202) 622–3110; for further
information regarding the maximum automobile value for applying the
vehicle cents-per-mile valuation rule, contact Dan E. Boeskin of the
Office of the Associate Chief Counsel (Tax Exempt and Government
Entities) at (202) 622– 6040 (not toll-free calls).
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