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

43.4 Annual Ceilings on Depreciation

Annual ceilings limit the amount of depreciation you may deduct for passenger cars and certain light trucks and vans. The ceilings apply both to self-employed individuals and employees. As a result of the ceilings, the actual write-off period for your car may be several years longer than the minimum recovery period of six years (43.5).

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Law Alert

Extension of Bonus Depreciation

Bonus first-year depreciation is allowed for vehicles placed in service in 2012 that were purchased new and used over 50% for business. The bonus depreciation ceiling for 2012 is $11,160 for cars and $11,360 for light trucks and vans; these ceilings must be reduced by personal use (43.4).

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Passenger cars.

The ceiling on depreciation for a car placed in service in 2012 is generally $3,160, reduced by personal use. However, bonus depreciation allows an $8,000 increase in the first-year ceiling for new vehicles used over 50% for business, to $11,160. For purposes of the annual depreciation ceilings, a car is any four-wheeled vehicle that is manufactured primarily for use on public thoroughfares and that is weight-rated by the manufacturer at 6,000 pounds or less when unloaded (without passengers or cargo). However, these vehicles are excluded from the car category and are thus exempt from the annual depreciation limits: (1) an ...