J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

43.3 Depreciation Restrictions on Cars, Trucks, and Vans

The law contains restrictions on so-called “listed property” that limit and, in some cases, deny depreciation deductions for a business car, truck, or van. Employees may be unable to claim any deduction at all under an employer convenience test. Employees meeting that test and self-employed individuals must determine if they can use accelerated MACRS rates or must use straight-line rates. Finally, regardless of which depreciation method is used, the annual deduction may not exceed a ceiling set by law for passenger cars and certain light trucks and vans; details on the annual ceilings are in the following section (43.4).

Employee must satisfy employer convenience test.

If you are an employee and use your own vehicle for work, you must be ready to prove that you use it for the convenience of your employer who requires you to use it in your job. If you do not meet this employer convenience test, you may not claim depreciation or first-year expensing. A letter from your employer stating you need the vehicle for business will not meet this test.

The facts and circumstances of your use of the vehicle may show that it is a condition of employment. For example, an inspector for a construction company uses his automobile to visit construction sites over a scattered area. The company reimburses him for his expenses. According to the IRS, the inspector’s use of the car is for the convenience of the company and is a condition of the ...