rp-19-26.pdf

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing.

This collection currently includes the publisher’s available advance-release directory. Historical bulletin renditions are discovered separately; an advance-release record alone does not certify the collection archive complete.

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.
(Also Part I, §§ 280F; 1.280F-7.)

Rev. Proc. 2019-26

SECTION 1. PURPOSE
This revenue procedure provides: (1) tables of limitations on depreciation
deductions for owners of passenger automobiles first placed in service by the taxpayer
during calendar year 2019; and (2) a table of amounts that must be included in income
by lessees of passenger automobiles first leased by the taxpayer during calendar year
2019. The tables detailing these depreciation limitations and lessee inclusion amounts
reflect the automobile price inflation adjustments required by § 280F(d)(7). For
purposes of this revenue procedure, the term “passenger automobiles” includes trucks
and vans.
SECTION 2. BACKGROUND
.01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on
the depreciation deduction for the year the taxpayer places the passenger automobile in
service and for each succeeding year. For passenger automobiles placed in service
after 2018, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts

- 2 -
allowable as depreciation deductions by a price inflation adjustment amount that is
determined using the automobile component of the Chained Consumer Price Index for
all Urban Consumers published by the Department of Labor.
.02 Section 168(k)(1) provides that, in the case of qualified property, the depreciation
deduction allowed under § 167(a) for the taxable year in which the property is placed in
service includes an allowance equal to the applicable percentage of the property’s
adjusted basis (hereinafter, referred to as Ҥ 168(k) additional first year depreciation
deduction”). Pursuant to § 168(k)(6)(A), the applicable percentage is 100 percent for
qualified property acquired and placed in service after September 27, 2017, and placed
in service before January 1, 2023, and is phased down 20 percent each year for
property placed in service through December 31, 2026. Pursuant to § 168(k)(8)(B)(i),
the applicable percentage is 30 percent for qualified property acquired before
September 28, 2017, and placed in service in 2019. For qualified property acquired and
placed in service after September 27, 2017, § 168(k)(2)(F)(i) increases the first year
depreciation allowed under § 280F(a)(1)(A)(i) by $8,000. For qualified property
acquired by the taxpayer before September 28, 2017, and placed in service by the
taxpayer during 2019, § 168(k)(2)(F)(iii) increases the first year depreciation allowed
under § 280F(a)(1)(A)(i) by $4,800.
.03 Tables 1 through 3 of this revenue procedure provide depreciation limitations for
passenger automobiles placed in service during calendar year 2019. Table 1 provides
depreciation limitations for passenger automobiles acquired by the taxpayer before
September 28, 2017, and placed in service by the taxpayer during calendar year 2019,
for which the § 168(k) additional first year depreciation deduction applies. Table 2

- 3 -
provides depreciation limitations for passenger automobiles acquired by the taxpayer
after September 27, 2017, and placed in service by the taxpayer during calendar year
2019, for which the § 168(k) additional first year depreciation deduction applies. Table
3 provides depreciation limitations for passenger automobiles placed in service during
calendar year 2019 for which no § 168(k) additional first year depreciation deduction
applies. The § 168(k) additional first year depreciation deduction does not apply for
2019 if the taxpayer: (1) did not use the passenger automobile during 2019 more than
50 percent for business purposes; (2) elected out of the § 168(k) additional first year
depreciation deduction pursuant to § 168(k)(7) for the class of property that includes
passenger automobiles; or (3) acquired the passenger automobile used and the
acquisition of such property did not meet the acquisition requirements in
§ 168(k)(2)(E)(ii).
.04 Section 280F(c)(2) requires a reduction to the amount of deduction allowed to
the lessee of a leased passenger automobile. Pursuant to § 280F(c)(3), the reduction
must be substantially equivalent to the limitations on the depreciation deductions
imposed on owners of passenger automobiles. Under § 1.280F-7(a) of the Income Tax
Regulations, this reduction requires a lessee to include in gross income an amount
determined by applying a formula to the amount obtained from a table. Table 4 applies
to lessees of passenger automobiles. This table shows income inclusion amounts for a
range of fair market values for each taxable year after the passenger automobile is first
leased.
SECTION 3. SCOPE
.01 The limitations on depreciation deductions in section 4.01(2) of this revenue

- 4 -
procedure apply to passenger automobiles, other than leased passenger automobiles,
that are placed in service by the taxpayer in calendar year 2019, and continue to apply
for each taxable year that the passenger automobile remains in service.
.02 The table in section 4.02 of this revenue procedure applies to leased passenger
automobiles for which the lease term begins during calendar year 2019. Lessees of
these passenger automobiles must use these tables to determine the inclusion amount
for each taxable year during which the passenger automobile is leased. See Rev. Proc.
2014-21, 2014-11 I.R.B. 641, as amplified and modified by section 4.03 of Rev. Proc.
2015-19, 2015-8 I.R.B. 656, for passenger automobiles first leased during calendar year
2014; Rev. Proc. 2015-19, as amplified and modified by section 4.03 of Rev. Proc.
2016-23, 2016-16 I.R.B. 581, for passenger automobiles first leased during calendar
year 2015, Rev. Proc. 2016-23 for passenger automobiles first leased during calendar
year 2016, Rev. Proc. 2017-29, 2017-14 I.R.B. 1065, for passenger automobiles first
leased during calendar year 2017, and Rev. Proc. 2018-03, 2018-2 I.R.B. 285, for
passenger automobiles first leased during calendar year 2018.
SECTION 4. APPLICATION
.01 Limitations on Depreciation Deductions for Certain Automobiles.
(1) Amount of the inflation adjustment. Under § 280F(d)(7)(B)(i), the automobile
price inflation adjustment for any calendar year is the percentage (if any) by which the
C-CPI-U automobile component for October of the preceding calendar year exceeds
the automobile component of the CPI (as defined in § 1(f)(4)) for October of 2017,
multiplied by the amount determined under § 1(f)(3)(B). The amount determined
under § 1(f)(3)(B) is the amount obtained by dividing the new vehicle component of the

- 5 -
C-CPI-U for calendar year 2016 by the new vehicle component of the CPI for calendar
year 2016, where the C-CPI-U and the CPI for calendar year 2016 means the average
of such amounts as of the close of the 12-month period ending on August 31, 2016.
Section 280F(d)(7)(B)(ii) defines the term "C-CPI-U automobile component" as the
automobile component of the Chained Consumer Price Index for All Urban Consumers
as described in § 1(f)(6). The product of the October 2017 CPI new vehicle component
(144.868) and the amount determined under § 1(f)(3)(B) (0.694370319) is 100.592.
The new vehicle component of the C-CPI-U released in November 2018 was 101.318
for October 2018. The October 2018 C-CPI-U new vehicle component exceeded the
product of the October 2017 CPI new vehicle component and the amount determined
under § 1(f)(3)(B) by 0.726 (101.318 - 100.592). The percentage by which the C-CPI-U
new vehicle component for October 2018 exceeds the product of the new vehicle
component of the CPI for October of 2017 and the amount determined under
§ 1(f)(3)(B) is 0.722 percent (0.726/100.592 x 100%), the automobile price inflation
adjustment for 2019 for passenger automobiles. The dollar limitations in § 280F(a) are
therefore multiplied by a factor of 0.00722, and the resulting increases, after rounding to
the nearest $100, are added to the 2018 limitations to give the depreciation limitations
applicable to passenger automobiles for calendar year 2019. This adjustment applies to
all passenger automobiles that are first placed in service in calendar year 2019.
(2) Amount of the limitation. Tables 1 through 3 contain the dollar amount of the
depreciation limitation for each taxable year for passenger automobiles a taxpayer
places in service during calendar year 2019. Use Table 1 for a passenger automobile
to which the § 168(k) additional first year depreciation deduction applies that is acquired

- 6 -
before September 28, 2017, and placed in service during calendar year 2019; Table 2
for a passenger automobile to which the § 168(k) additional first year depreciation
deduction applies that is acquired after September 27, 2017, and placed in service
during calendar year 2019; and Table 3 for a passenger automobile for which no
§ 168(k) additional first year depreciation deduction applies.
REV. PROC. 2019-26 TABLE 1

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES
ACQUIRED BEFORE SEPTEMBER 28, 2017, AND PLACED IN SERVICE DURING
CALENDAR YEAR 2019 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR
DEPRECIATION DEDUCTION APPLIES

Tax Year Amount
1st Tax Year $ 14,900
2nd Tax Year $ 16,100
3rd Tax Year $ 9,700
Each Succeeding Year $ 5,760

REV. PROC. 2019-26 TABLE 2

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES ACQUIRED
AFTER SEPTEMBER 27, 2017, AND PLACED IN SERVICE DURING CALENDAR
YEAR 2019, FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION
DEDUCTION APPLIES

Tax Year Amount
1st Tax Year $ 18,100
2nd Tax Year $ 16,100
3rd Tax Year $ 9,700
Each Succeeding Year $ 5,760

REV. PROC. 2019-26 TABLE 3

DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES
PLACED IN SERVICE DURING CALENDAR YEAR 2019 FOR WHICH NO § 168(k)
ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES

Tax Year Amount
1st Tax Year $ 10,100
2nd Tax Year $ 16,100
3rd Tax Year $ 9,700
Each Succeeding Year $ 5,760

- 7 -

.02 Inclusions in Income of Lessees of Passenger Automobiles.
A taxpayer must follow the procedures in § 1.280F-7(a) for determining the
income inclusion amounts for passenger automobiles first leased in calendar year 2019.
In applying these procedures, lessees of passenger automobiles should use Table 4 of
this revenue procedure.

REV. PROC. 2019-26 TABLE 4

DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2019

Fair Market Value of
Passenger Automobile

Tax Year During Lease

Over

Not Over

1
st

2
nd

3
rd

4
th

5
th
& later

$50,000 $51,000 0 1 1 3 3
51,000 52,000 4 11 15 20 23
52,000 53,000 9 20 30 36 43
53,000 54,000 13 30 44 53 63
54,000 55,000 17 40 58 70 83
55,000 56,000 22 49 72 88 102
56,000 57,000 26 59 86 105 122
57,000 58,000 31 68 101 122 142
58,000 59,000 35 78 115 139 161
59,000 60,000 39 88 129 156 181
60,000 62,000 46 102 151 181 211
62,000 64,000 55 121 179 216 250
64,000 66,000 63 140 208 251 289
66,000 68,000 72 160 236 284 329
68,000 70,000 81 179 265 318 369
70,000 72,000 90 198 293 353 408
72,000 74,000 98 217 322 387 448
74,000 76,000 107 236 351 421 487
76,000 78,000 116 255 379 456 526
78,000 80,000 125 275 407 489 567
80,000 85,000 140 308 458 549 635
85,000 90,000 162 356 529 635 734
90,000 95,000 184 404 600 720 833
95,000 100,000 206 452 671 806 931
100,000 110,000 238 525 778 934 1,079

- 8 -

REV. PROC. 2019-26 TABLE 4

DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES

WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2019

Fair Market Value of
Passenger Automobile

Tax Year During Lease

Over

Not Over

1
st

2
nd

3
rd

4
th

5
th
& later

110,000 120,000 282 621 920 1,105 1,277
120,000 130,000 326 717 1,063 1,276 1,474
130,000 140,000 370 812 1,206 1,447 1,672
140,000 150,000 413 909 1,348 1,618 1,869
150,000 160,000 457 1,005 1,491 1,788 2,067
160,000 170,000 501 1,101 1,633 1,960 2,264
170,000 180,000 545 1,197 1,776 2,130 2,461
180,000 190,000 588 1,293 1,919 2,301 2,659
190,000 200,000 632 1,389 2,061 2,473 2,856
200,000 210,000 676 1,485 2,204 2,643 3,053
210,000 220,000 720 1,581 2,346 2,815 3,250
220,000 230,000 763 1,677 2,489 2,986 3,448
230,000 240,000 807 1,773 2,632 3,156 3,645
240,000 and over 851 1,869 2,774 3,328 3,842

SECTION 5. EFFECTIVE DATE
This revenue procedure applies to passenger automobiles that a taxpayer first
places in service or first leases during calendar year 2019.
SECTION 6. DRAFTING INFORMATION
The principal author of this revenue procedure is Bernard P. Harvey of the Office
of Associate Chief Counsel (Income Tax & Accounting). For further information
regarding this revenue procedure, contact Mr. Harvey at (202) 317-7005 (not a toll-free
call).