Need Some Deductions for 2011?

Don't overlook these!

Updated for 2011

Car and Truck Depreciation

<< Previous

Depreciating Passenger Cars Weight-Rated 6,000 Pounds or Less

Cars, light trucks, vans, and SUVs weight-rated 6,000 pounds or less unloaded are subject to annual depreciation ceilings (limits).

When discussing depreciation, whether it's MACRS depreciation, bonus depreciation, or the Section 179 first-year expensing deduction, vehicles weight-rated 6,000 pounds or less are treated differently than other types of depreciable business property, including SUVs and trucks weighing more than 6,000.

Clarifying Annual Depreciation Limits

Depending on the type of depreciable business property, annual depreciation deductions may be limited to a specific amount.

Annual Depreciation Ceilings for Passenger Cars, Light Trucks, Vans, and SUVs weight-rated 6,000 or Less:

For passenger cars, light trucks, vans, and SUVs weight-rated 6,000 pounds or less, the annual depreciation ceilings for 2011 are:

Passenger cars: $3,060
Light trucks, vans, and SUVs: $3,260

A passenger car is defined as any four-wheeled vehicle that is manufactured primarily for use on public streets, roads and highways and is weight-rated by the manufacturer at 6,000 pounds or less when unloaded (without passengers or cargo).

Bonus Depreciation for Passenger Cars, Light Trucks, Vans, and SUVs weight-rated 6,000 or Less:

The first-year bonus depreciation deduction for 2011 for passenger cars, light trucks, vans, and SUVs 6,000 pounds or less is $8,000. The $8,000 bonus depreciation gets added to the regular annual depreciation ceilings.

By adding bonus depreciation to the regular annual depreciation ceilings, the annual ceiling is increased to:

$11,060 ($3,060 plus $8,000) for passenger cars
$8,260 ($3,260 plus $8,000) for light trucks, vans, and SUVs 6,000 pounds or less

Form 4562 instructions, page 16, has the annual depreciation tables for passenger cars (Table 3) and light trucks, vans, and SUVs weight-rated 6,000 pounds or less (Table 4). The depreciation limits in the tables assume 100% business use. So, if business use is less than 100%, you must reduce the ceiling amount by nonbusiness use.

For example, if you use your vehicle 80% for business and 20% for personal use, multiply the annual ceiling amount by 80% to get your depreciation deduction.

Heavy trucks and SUVs over 6,000 pounds are not subject to annual depreciation limits.

Depreciation for Heavy Trucks and SUVs Weight-Rated More than 6,000 Pounds:

Regular depreciation:
- There is no annual depreciation limit when claiming regular depreciation for depreciable business equipment.
Section 179 deduction (first-year expensing):
- For heavy trucks and SUVs weight-rated more than 6,000 pounds, the Section 179 deduction for 2011 is limited to $25,000 if the vehicle was purchased and placed in service during 2011.
  - Because of 100% bonus depreciation for 2011, the Section 179 limitation of $25,000 may be avoided and a full deduction claimed if the vehicle was purchased new (not pre-owned) in 2011, placed in service in 2011, and used 100% for business. In other words, simply claim 100% bonus depreciation instead of the Section 179 deduction.

Car Expenses-Depreciation: Electric cars

Next >>

Business Deductions

More Tax Topics

Quick Links

Hot Topics

Need Some Deductions for 2011?

Car and Truck Depreciation

<< Previous

Depreciating Passenger Cars Weight-Rated 6,000 Pounds or Less

Clarifying Annual Depreciation Limits

Next:

Related Links