Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury (Page 12 of 23) in pdf

childcare is provided or children whose parents or guardi-

of the acquired property is eligible for a special deprecia-

ans are residents of the same home.

tion allowance. See the discussion on like-kind exchanges

and involuntary conversions under How Much Can You

Example. A family daycare provider’s own children,

Deduct? in chapter 3 of Publication 946.

and any children who live in the family daycare provider’s

Increased section 179 limits. The maximum section 179

home on a full or part-time basis, are not eligible children

deduction you can elect for property you placed in service

even if they receive daycare services from the family day-

in 2003 has increased from $24,000 to $100,000 for quali-

care provider.

fied section 179 property ($135,000 for qualified zone

property, qualified renewal property, or qualified New York

Standard meal and snack rates. The following table

Liberty Zone property). This limit is reduced by the amount

shows the rates for 2003.

by which the cost of section 179 property placed in service

during the tax year exceeds $400,000 (increased from

Location of

Family Daycare

Lunch and

$200,000). See chapter 2 of Publication 946.

Provider

Breakfast

Dinner

Snack

Off-the-shelf computer software. The definition of sec-

States other than

tion 179 property has been expanded to include

$0.98

$1.80

$0.53

Alaska and Hawaii

off-the-shelf computer software placed in service after

2002. This is computer software that is readily available for

Alaska

$1.55

$2.93

$0.87

purchase by the general public, is subject to a nonexclu-

Hawaii

$1.13

$2.11

$0.63

sive license, and has not been substantially modified. It

includes any program designed to cause a computer to

A family daycare provider who chooses to use the

perform a desired function. However, a database or similar

standard meal and snack rates for a particular tax year

item is not considered computer software unless it is in the

must use the rates for all deductible food costs for eligible

public domain and is incidental to the operation of other-

children during that tax year.

wise qualifying software. See Eligible Property in chapter 2

For more information, see Publication 587, Business

of Publication 946.

Use of Your Home.

Revocation of section 179 election. A section 179 de-

Self-Employed Health

duction election (or any specification made in the election)

made after 2002 can be revoked without IRS approval by

Insurance Deduction

filing an amended return. However, once made, the revo-

cation is irrevocable.

Beginning in 2003, the self-employed health insurance

deduction percentage increases to 100%. For more infor-

mation, see chapter 7 in Publication 535, Business Ex-

Passenger Automobiles

penses.

Exclusion of qualified nonpersonal use trucks and

Nonqualified Capital

vans from definition of passenger automobile. A truck

Construction Fund Withdrawals

or van placed in service after July 6, 2003, that is a

by Commercial Fishermen

“qualified nonpersonal use vehicle” is not considered to be

a passenger automobile (and is therefore not subject to the

For tax years ending after May 5, 2003, the maximum tax

passenger automobile limits). A truck or van is a qualified

rate for individuals applied to nonqualified withdrawals

nonpersonal use vehicle only if it has been specially modi-

from the capital gain account in a capital construction fund

fied such that it is not likely to be used more than a de

decreases from 20% to 15%.

minimis amount for personal purposes. For example, a van

that has only a front bench for seating, in which permanent

shelving has been installed, that constantly carries mer-

Depreciation and

chandise or equipment, and that has been specially

Section 179 Expense

painted with advertising or the company’s name, is a vehi-

cle not likely to be used more than a de minimis amount for

personal purposes. See Passenger Automobiles in chap-

50% special depreciation allowance. For “qualified

ter 5 of Publication 946.

property” you acquired after May 5, 2003, and before

January 1, 2005, you can take a special depreciation

Depreciation limits on passenger automobiles. The

allowance that is equal to 50% of the property’s deprecia-

total depreciation deduction (including the section 179

ble basis. However, instead of claiming the 50% special

deduction and the special depreciation allowance) you can

allowance, you can elect to claim the 30% special allow-

take for a passenger automobile (that is not a truck or van

ance or elect not to claim any special allowance. See

or an electric vehicle) that you use in your business and

chapter 3 in Publication 946, How To Depreciate Property.

first place in service in 2003 is:

•

Note. If you acquire qualified property in a like-kind

$7,660 if acquired before May 6, 2003, and you

exchange or involuntary conversion, the carried-over basis

claim the 30% special allowance;

Page 12

Chapter 2 Tax Changes for Businesses

Publication 553 - Highlights Of 2003 Tax Changes - Department Of The Treasury Page 12

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