Instructions For Form 2106 - 2016 (Page 6 of 9) in pdf

W-2, enter this amount on line 25. If

it was placed in service, reduced by

than the income from your job and any

less than 100% of the annual lease

the depreciation allowance for the

other active trade or business on your

value was included in box 1 of your

remaining basis of the old vehicle.

Form 1040.

Form W-2, skip line 25.

You must use Form 4562 to compute

If you are claiming a section

your depreciation deduction. You

Line 28. If you completed Section D,

179 deduction on other

can't use Form 2106, Part II,

enter the amount from line 38. If you

property, or you placed more

Section D.

CAUTION

used Form 4562 to figure your

than $2,000,000 of section 179

depreciation deduction, enter the total

property in service during the year,

If you elect to use the method

of the following amounts.

use Form 4562 to figure your section

described in (1), you must do so on a

Depreciation allocable to your

179 deduction. Enter the amount of

timely filed tax return (including

vehicle(s) (from Form 4562, line 28).

the section 179 deduction allocable to

extensions). Otherwise, you must use

Any section 179 deduction

your vehicle from Form 4562, line 12,

the method described in (2).

allocable to your vehicle(s) (from

on Form 2106, line 31.

Line 30. Enter the vehicle's actual

Form 4562, line 29).

cost or other basis. Don't reduce your

Note. For section 179 purposes,

Section D—Depreciation of

basis by any prior year's depreciation.

the cost of the new vehicle doesn't

However, you must reduce your basis

Vehicles

include the adjusted basis of the

by any deductible casualty loss,

Depreciation is an amount you can

vehicle you traded in.

deduction for clean-fuel vehicle, gas

deduct to recover the cost or other

guzzler tax, alternative motor vehicle

Example.

basis of your vehicle over a certain

credit, or qualified plug-in electric

number of years. In some cases, you

Cost including taxes

$25,000

vehicle credit you claimed. Increase

. . . .

can elect to claim a special

your basis by any sales tax paid

Adjusted basis of

depreciation allowance or to expense,

(unless you deducted sales taxes in

− 3,000

trade-in

under section 179, part of the cost of

. . . . . . . . . . . . .

the year you purchased your vehicle)

your vehicle in the year of purchase.

Section 179 basis

$22,000

. . . . . .

and any substantial improvements to

For details, see Pub. 463.

your vehicle.

Limit on depreciation and

Vehicle trade-in. If you traded in

section 179 deduction

$11,160*

. . .

If you traded in your vehicle, your

one vehicle (the “old vehicle”) for

basis is the adjusted basis of the old

Smaller of:

another vehicle (the “new vehicle”) in

vehicle (reduced by depreciation

2016, there are two ways you can

Section 179 basis, or limit on

figured as if 100% of the vehicle's use

treat the transaction.

depreciation

$11,160

had been for business purposes) plus

. . . . . . . . .

1. You can elect to treat the

any additional amount you pay for the

Percentage on line 14

× .75

. . .

transaction as a tax-free disposition of

new vehicle. See Pub. 463 for more

Section 179 deduction

$8,370

the old vehicle and the purchase of

information.

. . .

the new vehicle. If you make this

If you converted the vehicle from

*$3,160 if electing out of special

election, you treat the old vehicle as

personal use to business use, your

depreciation allowance or not qualified

disposed of at the time of the trade-in.

basis for depreciation is the smaller of

property.

The depreciable basis of the new

the vehicle's adjusted basis or its fair

vehicle is the adjusted basis of the old

market value on the date of

vehicle (figured as if 100% of the

conversion.

Limit for sport utility and certain

vehicle's use had been for business

other vehicles. For sport utility and

Line 31. Enter the amount of any

purposes) plus any additional amount

certain other vehicles placed in

section 179 deduction and, if

you paid for the new vehicle. You then

service in 2016, the portion of the

applicable, any special depreciation

figure your depreciation deduction for

vehicle's cost taken into account in

allowance claimed for this year.

the new vehicle beginning with the

figuring your section 179 deduction is

date you placed it in service. You

Section 179 deduction. If 2016 is

limited to $25,000. This rule applies to

make this election by completing

the first year your vehicle was placed

any 4-wheeled vehicle primarily

Form 2106, Part II, Section D.

in service and the percentage on

designed or used to carry passengers

2. If you don't make the election

line 14 is more than 50%, you can

over public streets, roads, or

described in (1), you must figure

elect to deduct as an expense a

highways that isn't subject to any of

depreciation separately for the

portion of the cost (subject to a yearly

the passenger automobile limits

remaining basis of the old vehicle and

limit). To calculate this section 179

explained in the

line 36

instructions

for any additional amount you paid for

deduction, multiply the part of the cost

and is rated at no more than 14,000

the new vehicle. You must apply two

of the vehicle that you choose to

pounds gross vehicle weight.

depreciation limits. The limit that

expense by the percentage on line 14.

However, the $25,000 limit doesn't

applies to the remaining basis of the

The total of your depreciation and

apply to any vehicle:

old vehicle generally is the amount

section 179 deduction generally can't

Designed to have a seating

that would have been allowed had you

be more than the percentage on

capacity of more than nine persons

not traded the old vehicle. The limit

line 14 multiplied by the applicable

behind the driver's seat,

that applies to the additional amount

limit explained in the

line 36

Equipped with a cargo area of at

you paid for the new vehicle generally

instructions. Your section 179

least 6 feet in interior length that is an

is the limit that applies for the tax year

deduction for the year can't be more

open area or is designed for use as an

-6-

Instructions for Form 2106 (2016)

Instructions For Form 2106 - 2016 Page 6

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