The IRS has published Revenue Procedure 2011-21 which sets out new guidelines for inflation-adjusted depreciation limits and lease inclusion amounts for passenger vehicles. These new depreciation limits are effective for passenger automobiles, trucks, and vans placed in service in 2011 and first leases occurring during 2011. The Revenue Procedure also includes revised depreciation limits for passenger automobiles placed in service in calendar year 2010 for which the 50 percent or 100 percent additional first year depreciation deduction applies.
The revisions in the depreciation limits are based on the IRS's requirement to reexamine the amounts annually and make necessary adjustments to reflect price inflation. In addition, federal legislation enacted late in 2010 extended certain depreciation provisions that were set to expire at the end of 2010. This new Revenue Procedure reflects all of these changes.
The Small Business Jobs Act of 2010, enacted in September, 2010, extended the 50 percent additional first year depreciation deduction under IRC Section 168 to qualified property acquired and placed in service after December 31, 2007 and before January 1, 2011, as long as no written binding contract for acquisition of the vehicle was in place before January 1, 2008. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, enacted on December 10, 2010, further extended this 50 percent additional first year depreciation deduction to qualified property acquired and placed in service through December 31, 2012.
In addition, the December legislation provides for a 100 percent additional first year depreciation deduction for qualified property acquired and placed in service by a taxpayer after September 8, 2010 and before January 1, 2012.
Revenue Procedure 2011-21 provides tables for passenger automobiles to which the additional first year depreciation applies, and also provides tables for passenger automobiles for which the additional first year depreciation deduction does not apply. New inclusion tables for leased vehicles are also provided.