Instructions For Form 2106 - Employee Business Expenses

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the tax year it was placed in service,

property in service during the year,

You purchased it after December

reduced by the depreciation

use Form 4562 to figure your section

31, 2007, and placed it in service

allowance for the remaining basis of

179 deduction. Enter the amount of

before January 1, 2010, and

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the old vehicle. You must use Form

the section 179 deduction allocable to

The percentage on line 14 is more

4562 to compute your depreciation

your vehicle (from Form 4562, line

than 50%.

deduction. You cannot use Form

12) on Form 2106, line 31.

The special allowance is an

2106, Part II, Section D.

additional first year depreciation

Note. For section 179 purposes,

deduction of 50% of the depreciable

the cost of the new vehicle does not

If you elect to use the method

basis of your vehicle. However, your

include the adjusted basis of the

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

total section 179 deduction, special

vehicle you traded in.

timely filed tax return (including

depreciation allowance, and regular

extensions). Otherwise, you must use

Example.

depreciation deduction cannot be

the method described in (2).

more than $10,960 for cars and

Line 30. Enter the vehicle’s actual

Cost including taxes . . . . . . . .

$25,000

$11,060 for trucks and vans,

cost or other basis. Do not reduce

multiplied by your business use

− 3,000

Adjusted basis of trade-in . . . .

your basis by any prior year’s

percentage on line 14. See the line

Section 179 basis . . . . . . . . . .

$22,000

depreciation. However, you must

36 instruction for depreciation limits.

reduce your basis by any deductible

Limit on depreciation and

Use the worksheet below to figure

casualty loss, deduction for clean-fuel

section 179 deduction . . . . . . . $10,960*

the amount of the special

vehicle, gas guzzler tax, alternative

depreciation allowance.

motor vehicle credit, or qualified

Smaller of:

plug-in electric vehicle credit you

Section 179 basis, or limit on

Worksheet for the Special

claimed. Increase your basis by any

depreciation . . . . . . . . . . . . . .

$10,960

Depreciation Allowance

sales tax paid (unless you deducted

(keep for your records)

× .75

sales taxes in the year you purchased

Percentage on line 14 . . . . . . .

your vehicle) and any substantial

Section 179 deduction . . . . . .

$ 8,220

improvements to your vehicle.

1. Enter the total amount from

*$2,960 if electing out of special depreciation

line 30 . . . . . . . . . . . . . . . . .

If you traded in your vehicle, your

allowance or not qualified property.

basis is the adjusted basis of the old

2. Multiply line 1 by the

vehicle (reduced by depreciation

percentage on Form 2106, line

Limit for sport utility and certain

figured as if 100% of the vehicle’s use

14, and enter the result . . . . .

other vehicles. For sport utility and

had been for business purposes) plus

certain other vehicles placed in

3. Enter any section 179

any additional amount you pay for the

service in 2009, the portion of

deduction . . . . . . . . . . . . . . .

new vehicle. See Pub. 463 for more

vehicle’s cost taken into account in

4. Subtract line 3 from line 2 . . .

information.

figuring your section 179 deduction is

If you converted the vehicle from

limited to $25,000. This rule applies

5. Multiply line 4 by 50% (.50)

and enter the result . . . . . . . .

personal use to business use, your

to any 4-wheeled vehicle primarily

basis for depreciation is the smaller of

designed or used to carry passengers

6. Multiply the applicable limit

the vehicle’s adjusted basis or its fair

over public streets, roads, or

explained in the line 36

market value on the date of

highways, that is not subject to any of

instructions by the percentage

conversion.

the passenger automobile limits

on Form 2106, line 14, and

explained in the line 36 instructions,

enter the result. If line 36 limits

Line 31. Enter the amount of any

do not apply, skip lines 6 and

and is rated at no more than 14,000

section 179 deduction and special

7, and enter the amount from

pounds gross vehicle weight.

depreciation allowance claimed.

line 5 on line 8 . . . . . . . . . . .

However, the $25,000 limit does not

Section 179 deduction. If 2009

apply to any vehicle:

7. Subtract line 3 from line 6 . . .

is the first year your vehicle was

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Designed to have a seating

placed in service and the percentage

8. Enter the smaller of line 5 or

capacity of more than nine persons

on line 14 is more than 50%, you can

line 7. Add the result to any

behind the driver’s seat, or

section 179 deduction (line 3

elect to deduct as an expense a

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Equipped with a cargo area of at

above) and enter the total on

portion of the cost (subject to a yearly

Form 2106, line 31 . . . . . . . .

least 6 feet in interior length that is an

limit). To calculate this section 179

open area or is designed for use as

deduction, multiply the part of the

an open area but is enclosed by a

cost of the vehicle that you choose to

Election out. You can elect not to

cap and is not readily accessible

claim the special depreciation

expense by the percentage on line

directly from the passenger

allowance for your vehicle. If you

14. The total of your depreciation and

compartment, or

section 179 deduction generally

make this election, it applies to all

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cannot be more than the percentage

That has an integral enclosure,

property in the same class placed in

on line 14 multiplied by the applicable

fully enclosing the driver

service during the year.

limit explained in the line 36

compartment and load carrying

To make the election, attach a

instructions (on page 8). Your section

device, does not have seating

statement to your timely filed return

179 deduction for the year cannot be

rearward of the driver’s seat, and has

(including extensions) indicating that

more than the income from your job

no body section protruding more than

you are electing not to claim the

and any other active trade or

30 inches ahead of the leading edge

special depreciation allowance and

business on your Form 1040.

of the windshield.

the class of property for which you

are making the election.

If you are claiming a section

Special depreciation allowance.

179 deduction on other

You may be able to claim a special

More information. See Pub. 463,

property, or you placed more

depreciation allowance for your new

chapter 4, for more information on the

CAUTION

than $800,000 of section 179

vehicle if:

special depreciation allowance.

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Instructions For Form 2106 - Employee Business Expenses - 2009 Page 6

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