Listed Property

Listed property includes property used for transportation or entertainment and certain computers and cellular phones. There are additional recordkeeping requirements and rules you must follow when depreciating listed property.

Listed Property Defined

Listed property is any of the following.

• Any passenger automobile (defined later).
• Any other vehicle used for transportation.
• Any property of a type generally used for entertainment, recreation, or amusement.
• Any computer and related peripheral equipment unless it is used only at a regular business establishment and owned or leased by the person operating the establishment.
• Any cellular telephone (or similar telecommunication equipment).

Other vehicles used for transportation. This includes trucks, buses, boats, airplanes, motorcycles, and other vehicles used for transporting persons or goods.

Vehicles that are not listed property. The following vehicles, because of their design, are unlikely to be used very often for personal purposes. They are not listed property.

• Tractors and other special purpose farm vehicles.
• Bucket trucks (cherry pickers), dump trucks, flatbed trucks, and refrigerated trucks.
• Combines, cranes and derricks, and forklifts.
• Passenger buses with a capacity of at least 20 passengers that are used as passenger buses.

Predominant Use Test

If you do not use listed property predominantly (more than 50%) in a qualified business use, you cannot take a section 179 deduction for the property and you must depreciate the property using ADS (straight line method) over the ADS recovery period.

Listed property meets the predominant use test for any year if its business use is more than 50% of its total use. You must allocate the use of any item of listed property used for more than one purpose during the year among its various uses. You cannot use the percentage of investment use of listed property as part of the percentage of qualified business use to meet the predominant use test. However, you do use the combined total of business and investment use to figure your depreciation deduction for the property.

Property does not stop being predominantly used in a qualified business use because of a transfer at death.

Special Rules for Passenger Automobiles

For passenger automobiles, the total depreciation deduction (including the section 179 deduction) you can claim is limited.

Passenger automobile defined. A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans). It includes any part, component, or other item physically attached to the automobile or usually included in the purchase price of an automobile.

Maximum deductions for 2000. Determine the maximum depreciation deduction (including section 179) you can claim for a passenger automobile based on the date you place it in service. The maximum deductions for 2000, based on the year the automobile is placed in service, are shown in the following table.

You must reduce these limits further if your business/investment use is less than 100%.

Exceptions for clean-fuel vehicles. There are two exceptions to the depreciation limits for passenger automobiles. These exceptions are effective after August 5, 1997, for automobiles that run on clean fuel.

The first exception is a higher depreciation deduction for clean-fuel vehicles. The maximum deductions for 2000, based on the year the clean-fuel vehicle is placed in service, are shown in the following table.

The second exception is for any costs you pay to retrofit parts and components to modify an automobile to run on clean fuel. These costs are not subject to the limits on depreciation for automobiles. Only the cost of the automobile, excluding this modification, is subject to the limit.

For more information on clean-fuel vehicles, see chapter 12 in Publication 535, Business Expenses.

Fully depreciated automobile. If you have fully depreciated a car you are still using in your business, you can continue to claim your other operating expenses for the business use of your car. Continue to keep records, as explained next.

More information. For more information about deducting expenses for the business use of your passenger automobile, see chapter 4 in Publication 463.

What Records Must Be Kept

You cannot take any depreciation or section 179 deduction for the use of listed property (including passenger automobiles) unless you can prove business and investment use with adequate records or sufficient evidence to support your own statements.

Adequate records. To meet the adequate records requirement, you must maintain an account book, diary, log, statement of expense, trip sheet, or similar record or other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. You do not have to record information in an account book, diary, or similar record if the information is already shown on the receipt. However, your records should back up your receipts in an orderly manner.

How long to keep records. For listed property, you must keep records for as long as any excess depreciation can be recaptured (included in income). Recapture can occur in any tax year of the recovery period.

For more information on records, see chapter 4 in Publication 946.

Previous| First | Next

Publication Index | IRS-Forms Main | Home