rp-16-14.pdf

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26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 62, 132, 179)

Rev. Proc. 2016-14

Table of Contents
SECTION 1. PURPOSE
SECTION 2. BACKGROUND
SECTION 3. 2016 ADDITIONAL ADJUSTED ITEMS Code Section
.01 Certain Expenses of Elementary and Secondary 62(a)(2)(D)
School Teachers
.02 Qualified Transportation Fringe Benefit 132(f)

.03 Election to Expense Certain Depreciable Assets 179

SECTION 4. EFFECT ON OTHER DOCUMENTS

SECTION 5. EFFECTIVE DATES
SECTION 6. DRAFTING INFORMATION

SECTION 1. PURPOSE
Rev. Proc. 2015-53, 2015-44 I.R.B. 615, provides inflation adjustments for
certain items for 2016. This revenue procedure provides the inflation adjustments for
additional items that are adjusted for inflation due to the enactment of the Protecting
Americans from Tax Hikes Act (PATH Act) of 2015, enacted as part of the Consolidated

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Appropriations Act, 2016, Public Law 114-113, div. Q (the “Act”). This revenue
procedure also modifies part of section 3.17 of Rev. Proc. 2015-53, concerning the
inflation adjustment for excludable transit benefits.
SECTION 2. BACKGROUND
.01 Section 104 of the Act provides that under § 62(a)(2)(D) of the Internal
Revenue Code the amount of the deduction allowed under § 162 which consists of
expenses paid or incurred by an eligible educator in connection with books, supplies
(other than nonathletic supplies for courses of instruction in health or physical
education), computer equipment (including related software and services) and other
equipment, and supplementary materials used by the eligible educator in the classroom
is adjusted for inflation for taxable years beginning after December 31, 2015. (See
section 3.01 of this revenue procedure.)
.02 Section 105 of the Act amends § 132(f)(2) of the Code to create parity, for
periods after December 31, 2014, between the transit benefit exclusion for the
aggregate of transportation in a commuter highway vehicle and any transit pass, and
the exclusion for qualified parking. (See section 3.02 of this revenue procedure.)
.03 Section 124 of the Act amends § 179(b)(1) and (2) of the Code to provide
that the dollar limitation for the aggregate cost of § 179 property that a taxpayer may
elect to expense is $500,000, and that dollar amount is reduced by the amount by which
the cost of all § 179 property placed in service during the taxable year exceeds
$2,000,000. For taxable years beginning in 2016, these amounts are adjusted for
inflation. (See section 3.03 of this revenue procedure.)

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SECTION 3. 2016 ADDITIONAL INFLATION ADJUSTED ITEMS
.01 Certain Expenses of Elementary and Secondary School Teachers. For
taxable years beginning in 2016, under § 62(a)(2)(D) the amount of the deduction
allowed under § 162 which consists of expenses paid or incurred by an eligible educator
in connection with books, supplies (other than nonathletic supplies for courses of
instruction in health or physical education), computer equipment (including related
software and services) and other equipment, and supplementary materials used by the
eligible educator in the classroom is not in excess of $250.
.02 Qualified Transportation Fringe Benefit. For taxable years beginning in
2016, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit
exclusion amount for transportation in a commuter highway vehicle and any transit pass
is $255. This section modifies section 3.17 of Rev. Proc. 2015-53. (For taxable years
beginning in 2015, see Notice 2016-6, 2016-4 I.R.B 287, Application of Retroactive
Increase in Excludable Transit Benefits.)
.03 Election to Expense Certain Depreciable Assets. For taxable years
beginning in 2016, under § 179(b)(1) the aggregate cost of any § 179 property that a
taxpayer elects to treat as an expense cannot exceed $500,000. Under § 179(b)(2)(C),
the $500,000 limitation is reduced (but not below zero) by the amount the cost of § 179
property placed in service during the 2016 taxable year exceeds $2,010,000.
SECTION 4. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2015-53 is modified.
SECTION 5. EFFECTIVE DATES

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Section 3 of this revenue procedure applies to taxable years beginning in 2016.
SECTION 6. DRAFTING INFORMATION
The principal author of this revenue procedure is William Ruane of the Office of
Associate Chief Counsel (Income Tax & Accounting). For further information regarding
this revenue procedure, contact Mr. Ruane at (202) 317-4718 (not a toll-free call).