April 16, 2009 12:00 am

Depreciation Limits for Business Vehicle Purchases for 2009

The IRS has announced the dollar limits on depreciation that can be claimed for cars and light trucks purchased for business and placed in service in 2009. The limits for passenger cars are the same as those in 2008; the limits for light trucks are slightly lower.

For passenger cars purchased and placed in service in 2009, the first-year dollar limit on depreciation is $10,960 for vehicles eligible for bonus depreciation (e.g., new cars) and $2,960 for vehicles not eligible for bonus depreciation (e.g., preowned cars).

Inclusion Amounts for Leased Vehicles

The IRS also announced the inclusion amounts for vehicles first leased in 2009 that are used for business. The inclusion amount is designed to equal the write-off allowed for leased vehicles with the depreciation allowance for purchased vehicles. The inclusion amount is added to income each year of the lease. The inclusion amount applies to passenger cars and trucks with a fair market value over $18,500. The inclusion amounts for passenger cars first leased in 2009 are lower than the inclusion amounts for 2008. For example, the first-year inclusion amount for a leased car with a fair market value of $25,000 is only $22 in 2009; a similar vehicle first leased in 2008 had an inclusion amount of $34.

Source: Rev. Proc. 2009-24

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Tax Glossary

Fiduciary

A person or corporation such as a trustee, executor, or guardian who manages property for another person.

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