What is a fmv lease

what is a fmv lease

Built into the standard mileage rate is an implied amount of depreciation. You generally don't have to worry about the number until you sell the car. See the table Depreciation Adjustment for Standard Mileage Rate. below. #From January 1 through June 30, 2011 the business rate is 51 cents/mile; from July 1 through December 31, 2011 the rate is 55.5 cents/mile. For medical and moving purposes the rate is 19 cents/mile for January 1 through June 30, 2011 and 23.5 cents/mile from July 1 through December 31, 2011.

When valuing personal use of a company auto (i.e. computing the value to put on the employee's W-2 for personal use), the standard mileage rate above can be used only if the fair market value of the auto when first made available to the employee does not exceed a specified maximum. The table below shows the maximum for the indicated years. (Reg. Sec. 1.61-21(d))

What's the fair market value of a new car. The question is more than academic. The value is important if you're an employer and provide a car for an employee's use, if you lease a car, etc. You can use the cost of the vehicle as the fair market value, as long as the purchase is in an arm's length transaction. There are two safe harbors. You can use the manufacturer's suggested retail price less 8% or the manufacturer's invoice price plus 4%. Add sales tax and title fees to the price.

Depreciation Adjustment for Standard Mileage Rate Example-- You purchased a car in 2010 and use the car for business purposes 10,000 miles per year in 2010, 2011, 2012, 2013, and 2014. You sell the car on January 1, 2015. You've got to reduce your cost basis by $11,300 (10,000 x 0.23 for 2010, 10,000 x 0.22 for 2011, 0.23 x 10,000 for 2012 and 2013, and 0.22 x 10,000 for 2014). If the reduction is large enough, you might end up having to report a profit on the sale of the car.

Depreciation Limits for Cars and Trucks 2015

Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. Since 50% bonus depreciation is not currently available there is only one set of limits for cars and another for trucks. (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2015 $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2015) is $3,160. Your maximum depreciation in subsequent years is as indicated. The first-year limit also applies to any Sec. 179 expense option.

Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

  • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 2014

    Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. In addition, for 2014 all new assets qualify for the 50% bonus depreciation. (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2014 $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2014) is $11,160. You would take $5,100 of depreciation in 2015; $3,050 in 2016; and $1,875 in 2017 and subsequent years until the car is fully depreciated (or disposed of). The first-year limit also applies to any Sec. 179 expense option.

    Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

    Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

    • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 2013

    Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. In addition, for 2013 all new assets qualify for the 50% bonus depreciation (100% bonus depreciation expired at the end of 2011). (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2013 for $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2013) is $11,160. You would take $5,100 of depreciation in 2014; $3,050 in 2015; and $1,875 in 2016 and subsequent years until the car is fully depreciated (or disposed of). Thus, a $41,000 car would take about 14 years to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option.

    Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

    Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

    • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 2012

    Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. In addition, for 2012 all new assets qualify for the 50% bonus depreciation (100% bonus depreciation expired at the end of 2011). (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2012 for $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2012) is $11,160. You would take $5,100 of depreciation in 2013; $3,050 in 2014; and $1,875 in 2015 and subsequent years until the car is fully depreciated (or disposed of). Thus, a $41,000 car would take about 14 years to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option.

    Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

    Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

    • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 2011

    Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. In addition, for 2011 all new assets qualify for the 50% or 100% bonus depreciation. (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2011 for $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2011) is $11,060. You would take $4,900 of depreciation in 2012; $2,950 in 2013; and $1,775 in 2014 and subsequent years until the car is fully depreciated. Thus, a $41,000 car would take about 15 years to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option.

    Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

    Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

    • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 2010

    Depreciation on cars and light trucks and vans is limited. There are two different limits--one for cars and one for trucks. In addition, for 2010 all new assets qualify for the 50% bonus depreciation. Note, vehicles purchased after September 8, 2010 qualify for 100% bonus depreciation. (Special tables, not reproduced here, apply to pure electric vehicles.) Example: You purchased a new car in June 2010 for $41,000. No matter how expensive the vehicle, your maximum depreciation in the first year (2010) is $11,060. You would take $4,900 of depreciation in 2011; $2,950 in 2012; and $1,775 in 2013 and subsequent years until the car is fully depreciated. Thus, a $41,000 car would take about 15 years to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option.

    Note 1: The limitation on trucks and vans in the table above refers to passenger autos that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis. Trucks and vans that are over the 6,000 pound loaded gross vehicle weight and qualified nonpersonal use vehicles are not subject to any depreciation limits. In order to qualify, the vehicle must be a qualified nonpersonal use vehicle. For trucks and vans, a qualified nonpersonal use vehicle is one that has been specially modified, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name, so that they are not likely to be used more than a de minimis amount for personal purposes. These specially manufactured or modified vehicles do not provide significant elements of personal benefit, and a taxpayer

    is unlikely to purchase these vehicles unless motivated by a valid business purpose that could not be met with a less-expensive vehicle. To be sure if you vehicle qualifies, check with your tax advisor.

    Note 2: The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle:

    • Designed to seat more than nine passengers behind the driver's seat.
  • Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
  • Depreciation Limits for Cars and Trucks 1995-2009

    The maximum depreciation for autos and trucks and vans for the fourth and subsequent years of ownership for the years 1995-2005 are:

    Annual Lease Value Tables

    Use this table to find the annual lease value for imputing income on an employee's use of a vehicle. The fair market value is determined at the time the vehicle is first made available to the employee. The table applies to vehicles provided to an employee for a continuous period of 30 days or more. See below for shorter time periods.

    For vehicles with a fair market value in excess of $59,999, you can compute the annual lease value by multiplying the fair market value by 0.25 and adding $500 to the result.

    Daily Lease Value

    If you provide an automobile to an employee for a continuous period of less than 30 days, you must use the daily lease value to figure its value. You compute the daily lease value by multiplying the annual lease value by a fraction, using four times the number of days of availability as the numerator and 365 as the denominator. For example, 9 days for a $40,000 vehicle would be (9 x 4)/365 x $10,750 or $1,060.27.

    You can apply a prorated annual lease value for a period of continuous availability of less than 30 days by treating the auto as if it had been available for 30 days. Use a prorated annual lease value if it would result in a lower valuation than applying the daily lease value to the shorter period of availability.

    Inclusion Amounts for Autos First Leased in 2014

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2014-21. See below for an example.
  • Example-- On January 1, 2014 your business enters into a 3-year lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2014 the business can only deduct $7,120 ($7,188 less $68, from the table above). (For 2015, you can only deduct $7,087, $7,188 less $101.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2014, you could only deduct $4,984. Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2014

    Notes--

      There are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $90,000.

    Inclusion Amounts for Autos First Leased in 2013

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2013-21. See below for an example.
  • Example-- On January 1, 2013 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2013 the business can only deduct $7,169 ($7,188 less $19, from the table above). (For 2014, you can only deduct $7,146, $7,188 less $42.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2013, you could only deduct $5,018. Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2013

    Notes--

      There are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2012

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2012-23. See below for an example.
  • Example-- On January 1, 2012 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2012 the business can only deduct $7,167 ($7,188 less $21, from the table above). (For 2013, you can only deduct $7,142, $7,188 less $46.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2012, you could only deduct $5,017. Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2012

    Notes--

      There are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2011

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2011-21. See below for an example.
  • Example-- On January 1, 2011 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2011 the business can only deduct $7,152 ($7,188 less $36, from the table above). (For 2012, you can only deduct $7,108, $7,188 less $80.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2011, you could only deduct $5,007 ($5,032 less $25; both amounts are multiplied by 0.7). Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2011

    Notes--

      There are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2010

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2010-18 (IRB 2010-9). See below for an example.
  • Example-- On January 1, 2010 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2010 the business can only deduct $7,117 ($7,188 less $71). (For 2011, you can only deduct $7,031, $7,188 less $157.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2010, you could only deduct $4,982 ($5,032 less $50; both amounts are multiplied by 0.7). Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2010

    Notes--

      For 2010 there are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2009

    Notes--

      There are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans.

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

  • You can view the complete tables in Rev. Proc. 2009-24. The Revenue Procedure will appear in IRB 2009-16. See below for an example.
  • Example-- On January 1, 2009 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2009 the business can only deduct $7,105 ($7,188 less $83). (For 2009, you can only deduct $7,007, $7,188 less $181.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2009, you could only deduct $4,974 ($5,032 less $58; both amounts are multiplied by 0.7). Prorate amounts for vehicles first leased after January 1 of the year. Note. Most software programs will make the adjustment when you enter the lease inclusion amount for the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2009

    Notes--

      For 2009 there are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2008

    Notes--

      For 2008 there are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans. You can view the complete tables in Rev. Proc. 2008-22. Go to Internal Revenue Bulletin 2008-12 to download the bulletin. See below for an example.

    Example-- On January 1, 2008 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2008 the business can only deduct $7,006 ($7,188 less $182). (For 2009, you can only deduct $6,789, $7,188 less $399.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2008, you could only deduct $4,905 ($5,032 less $127; both amounts are multiplied by 0.7). Prorate amounts for vehicles first leased after January 1 of the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2008

    Notes--

      For 2008 there are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

    Inclusion Amounts for Autos First Leased in 2007

    Notes--

      For 2007 there are two tables, one for autos (reproduced here) and one for trucks and vans (see below).

    Besides the amounts in the tables below and additional amount may be includable in income if the business use of the auto is or falls to 50% or less. See IRS Publication 946 for a worksheet and percentage table.

    The IRS tables go to $240,000. We've only included values up to $120,000 for autos; $80,000 for trucks and vans. You can view the complete tables in Rev. Proc. 2007-30; IRB 2007-18. Go to Internal Revenue Bulletin 2007-18 to download the bulletin. See below for an example.

    Example-- On January 1, 2007 your business enters into a lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2007 the business can only deduct $6,940 ($7,188 less $248). (For 2008, you can only deduct $6,645, $7,188 less $543.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2007, you could only deduct $4,858 ($5,032 less $174; both amounts are multiplied by 0.7). Prorate amounts for vehicles first leased after January 1 of the year.

    Inclusion Amounts for Trucks and Vans First Leased in 2007

    Notes--

      For 2007 there are two tables, one for autos (reproduced above) and one for trucks and vans (below) Please see the definition of trucks and vans in Note 1, above .

    The IRS tables go to $250,000. We've only included values up to $80,000.

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    Source: www.smbiz.com

    Category: Credit

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