SECTION 4. APPLICATION — Internal Revenue Bulletin 1996-8

A taxpayer placing an automobile in service for the first time during calendar year 1996 is limited to the depreciation deduction shown in Table 1 of section 4.02(2). A taxpayer first leasing an automobile in calendar year 1996 must use Table 2 in section 4.03 to determine the inclusion amount that is added to gross income. Otherwise, the procedures of § 1.280F–7(a) must be followed.
Limitations on Depreciation De- ductions for Certain Automobiles .

(1) Amount of the Inflation Adjust- ment . Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. The term ‘‘CPI automobile component’’ is defined in § 280F(d)(7)(B)(ii) as the ‘‘automobile component’’ of the Consumer Price Index for all Urban

Consumers published by the Department of Labor (the CPI). The new car component of the CPI was 115.2 for October 1987 and 138.6 for October 1995. The October 1995 index exceeded the October 1987 index by 23.4. The Internal Revenue Service has, therefore, determined that the auto

mobile price inflation adjustment for 1996 is 20.31 percent (23.4/115.2 100%). This adjustment is applicable to all automobiles that are first placed in service in calendar year 1996. The dollar limitations in § 280F(a) must therefore be multiplied by a factor of 0.2031, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for 1996.

(2) Amount of the Limitation . For automobiles placed in service in calendar year 1996, Table 1 contains the dollar amount of the depreciation limitations for each tax year.

DEPRECIATION LIMITATIONS FOR AUTOMOBILES FIRST PLACED IN SERVICE IN CALENDAR YEAR 1996

Tax Year Amount

1st Tax Year $3,060 2nd Tax Year $4,900 3rd Tax Year $2,950 Each Succeeding Year $1,775

Inclusions in Income of Lessees of Automobiles . The inclusion amounts for automobiles first leased in calendar year 1996 are calculated under the procedures described in § 1.280F–7(a). Table 2 of this revenue procedure is the applicable table to be used in applying those procedures.

REV. PROC. 96–25 TABLE 2

DOLLAR AMOUNTS FOR AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1996

Fair Market Value

of Automobile

Over Not Over

Tax Year During Lease

5th and Later 1st 2nd 3rd 4th

$15,500 $15,800 3 6 8 10 10 15,800 16,100 5 11 16 19 21 16,100 16,400 7 16 24 27 32 16,400 16,700 10 21 31 37 42 16,700 17,000 12 26 39 46 53 17,000 17,500 15 33 49 58 67 17,500 18,000 19 42 61 73 84 18,000 18,500 23 50 74 88 102 18,500 19,000 27 59 86 104 119 19,000 19,500 31 67 99 119 136 19,500 20,000 35 75 112 134 154 20,000 20,500 38 84 125 149 171 20,500 21,000 42 93 137 164 189 21,000 21,500 46 101 150 179 207 21,500 22,000 50 110 162 194 225 22,000 23,000 56 122 182 217 250 23,000 24,000 64 139 207 247 286 24,000 25,000 71 157 232 277 320 25,000 26,000 79 174 257 308 355 26,000 27,000 87 191 282 338 390 27,000 28,000 95 207 308 369 425 28,000 29,000 103 224 333 399 460

REV. PROC. 96–25 TABLE 2
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1996

Fair Market Value of Automobile Over Not Over	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease
Fair Market Value of Automobile Over Not Over	1st	2nd	3rd	4th	5th and Later
29,000 30,000 30,000 31,000 31,000 32,000 32,000 33,000 33,000 34,000 34,000 35,000 35,000 36,000 36,000 37,000 37,000 38,000 38,000 39,000 39,000 40,000 40,000 41,000 41,000 42,000 42,000 43,000 43,000 44,000 44,000 45,000 45,000 46,000 46,000 47,000 47,000 48,000 48,000 49,000 49,000 50,000 50,000 51,000 51,000 52,000 52,000 53,000 53,000 54,000 54,000 55,000 55,000 56,000 56,000 57,000 57,000 58,000 58,000 59,000 59,000 60,000 60,000 62,000 62,000 64,000 64,000 66,000 66,000 68,000 68,000 70,000 70,000 72,000 72,000 74,000 74,000 76,000 76,000 78,000 78,000 80,000 80,000 85,000 85,000 90,000 90,000 95,000 95,000 100,000 100,000 110,000 110,000 120,000 120,000 130,000 130,000 140,000 140,000 150,000 150,000 160,000	110 118 126 134 141 149 157 165 172 180 188 196 203 211 219 227 235 242 250 258 266 273 281 289 297 304 312 320 328 336 343 355 370 386 402 417 433 448 464 479 495 522 561 600 638 697 774 852 930 1,007 1,085	242 259 276 293 310 327 344 361 378 395 412 429 446 463 480 497 514 531 548 565 582 599 616 633 650 668 684 701 718 735 753 778 812 846 880 914 948 982 1,016 1,050 1,084 1,144 1,229 1,314 1,400 1,527 1,697 1,868 2,038 2,208 2,378	358 383 408 433 459 484 509 535 560 585 611 636 661 687 712 737 762 788 813 838 863 889 914 939 964 989 1,015 1,040 1,066 1,091 1,115 1,154 1,205 1,255 1,305 1,356 1,406 1,457 1,508 1,558 1,609 1,697 1,823 1,950 2,075 2,265 2,518 2,770 3,023 3,276 3,529	429 459 490 520 550 581 611 641 672 702 732 762 793 822 853 883 914 944 974 1,005 1,035 1,065 1,096 1,126 1,157 1,186 1,217 1,247 1,277 1,307 1,338 1,383 1,443 1,504 1,565 1,626 1,686 1,747 1,807 1,868 1,928 2,034 2,186 2,337 2,489 2,716 3,019 3,322 3,624 3,927 4,230	495 531 565 600 635 670 705 740 775 810 844 880 915 950 985 1,020 1,054 1,089 1,125 1,159 1,195 1,230 1,264 1,299 1,334 1,370 1,404 1,440 1,474 1,509 1,544 1,597 1,667 1,737 1,807 1,876 1,947 2,016 2,086 2,156 2,226 2,349 2,523 2,698 2,873 3,135 3,485 3,834 4,185 4,534 4,884

REV. PROC. 96–25 TABLE 2
DOLLAR AMOUNTS FOR AUTOMOBILES
WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 1996

Fair Market Value of Automobile Over Not Over	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease	Tax Year During Lease
Fair Market Value of Automobile Over Not Over	1st	2nd	3rd	4th	5th and Later
160,000 170,000 170,000 180,000 180,000 190,000 190,000 200,000 200,000 210,000 210,000 220,000 220,000 230,000 230,000 240,000 240,000 250,000	1,163 1,240 1,318 1,396 1,473 1,551 1,629 1,706 1,784	2,548 2,719 2,889 3,059 3,230 3,400 3,570 3,740 3,911	3,781 4,033 4,286 4,539 4,791 5,044 5,296 5,550 5,801	4,533 4,837 5,139 5,442 5,745 6,047 6,351 6,653 6,956	5,234 5,583 5,933 6,282 6,632 6,982 7,332 7,681 8,032