Instructions For Form 2106 - Employee Business Expenses

by attaching a statement to your tax

any investment credit taken before

50%. The method in this column, the

return indicating that you are electing

1986 unless you took the reduced

150% declining balance method, will

to claim the 30% instead of the 50%

credit).

give you a smaller depreciation

special allowance for 5-year property.

deduction than in column (a) for the

Line 33. If you used the standard

The election must be made on a

first 3 years. However, you will not

mileage rate in the first year the

timely-filed original return (including

have a “depreciation adjustment” on

vehicle was placed in service and

extensions) or on an amended return

this vehicle for the alternative

now elect to use the actual expense

filed within 6 months of the due date

minimum tax. This may result in a

method, you must use the straight

of the return (excluding extensions). If

smaller tax liability if you must file

line method of depreciation for the

you file an amended return, write

Form 6251, Alternative Minimum

vehicle’s estimated useful life.

“Filed pursuant to section

Tax — Individuals.

Otherwise, use the Depreciation

301.9100-2” at the top of that return.

Method and Percentage Chart on

Column (c). You must use

page 7 to find the depreciation

column (c) for vehicles placed in

Worksheet for the Special Depreciation

method and percentage to enter on

service after 1986 if the business use

Allowance (keep for your records)

line 33. (For example, if you placed a

percentage on line 14 is 50% or less.

car in service on July 1, 2003, and

The method for these vehicles is the

1. Enter the amount from line

you use the method in column (a),

straight line method over 5 years. The

30 . . . . . . . . . . . . . . . . . . 1.

enter “200 DB 20%” on line 33.) To

use of this column is optional for

2. Multiply line 1 by the

use the chart, first find the date you

these vehicles if the business use

percentage on Form 2106,

placed the vehicle in service (line 11).

percentage on line 14 is more than

line 14, and enter the

Then, select the depreciation method

result . . . . . . . . . . . . . . . . 2.

50%. This column is also used for

and percentage from column (a), (b),

3. Enter any section 179

vehicles placed in service after June

or (c). For vehicles placed in service

deduction . . . . . . . . . . . . 3.

18, 1984, and before 1987 if you

before 2003, use the same method

4. Subtract line 3 from line 2

elected the straight line method over

you used on last year’s return unless

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

a recovery period of 12 years.

a decline in your business use

or, if applicable, 30% (.3),

requires a change to the straight line

Note: If your vehicle was used more

and enter the result . . . . . 5.

method. For vehicles placed in

than 50% for business in the year it

6. Multiply the applicable limit

service during 2003, select the

was placed in service and used 50%

explained in the line 36

depreciation method and percentage

or less in a later year, part of the

instructions by the

after reading the explanation for each

percentage on Form 2106,

depreciation and section 179

column.

line 14, and enter the

deduction previously claimed may

Column (a). You may use column

result . . . . . . . . . . . . . . . . 6.

have to be added back to your

(a) only if the business use

7. Subtract line 3 from line 6

income in the later year. Figure the

percentage on line 14 is more than

8. Enter the smaller of line 5

amount to be included in income on

50%. The method in this column, the

or line 7. Add the result to

Form 4797, Sales of Business

200% declining balance method, will

any section 179 deduction

Property.

give you the largest deduction in the

and enter the total on Form

If you placed other business

year your vehicle is placed in service.

2106, line 31 . . . . . . . . . . 8.

property in service during the

This column is also used for vehicles

placed in service before 1987 and

year you placed your vehicle

CAUTION

Line 32. To figure the basis for

in service (for any year after 1986), or

depreciated under the accelerated

depreciation, multiply line 30 by the

cost recovery system (ACRS).

you used your vehicle mainly within

percentage on line 14. From that

an Indian reservation, you may not be

result, subtract the full amount of any

Column (b). You may use column

able to use the chart. See Pub. 946

section 179 deduction and special

(b) only if the business use

to figure your depreciation.

depreciation allowance (and half of

percentage on line 14 is more than

-6-

Instructions For Form 2106 - Employee Business Expenses - 2003 Page 6

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