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Safe Harbor Rule for Autos that Claim Bonus Depreciation

The IRS has issued guidance (IRS Revenue Procedure 2019-13) that provides a safe harbor method for determining depreciation deductions for autos that claim 100-percent bonus depreciation for 2018 – 2022.

The safe harbor method allows the remaining basis of the auto (after the $18,000 bonus depreciation is taken) to be depreciated using the applicable depreciation table in Appendix A of IRS Publication 946 (How to Depreciate Property) for each subsequent year.

IRS Rev. Proc. 2019-13 provides examples of how the safe harbor rule works beginning on page 7.

A taxpayer adopts the safe harbor method by applying it to deduct depreciation of an auto on their return beginning in the second year the auto is used.

For more details IRS News Release IR-2019-14 – IRS Provides Safe Harbor Method of Accounting for passenger automobiles that qualify for the 100-percent additional first year depreciation

Mark Castro, CPA

Mark Castro, CPA

Mark has been with CrossLink Professional Tax Solutions (CPTS) since 2008, but has been in the tax industry since 1990. As the government/tax industry liaison for CPTS, Mark has been very active in working with the IRS, States, and other tax industry members to help improve communications, promote standardization, and simplification of eFile systems. Mark has also been active with industry associations as a board member of the National Association of Computerized Processors (NACTP) and the Council of Electronic Revenue Communication Advancement (CERCA) for many years. These two associations work with the IRS and States to help solve key eFile and electronic tax system issues and work to improve the operations of the State and IRS eFile systems.
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Recent Tax Updates