Instructions for Form 2106

Transcription

1 2011 Instructions for Form 2106 Employee Business Expenses Department of the Treasury Internal Revenue Service Section references are to the Internal $11,260 ($3,260 if you elect not to necessary expenses for your job. See Revenue Code unless otherwise noted. claim the special depreciation the flowchart below to find out if you allowance). For more details, see the must file this form. General Instructions discussion under Section D Depreciation of Vehicles, later. An ordinary expense is one that is What s New common and accepted in your field of Future developments. The IRS has Standard mileage rate. The 2011 trade, business, or profession. A created a page on IRS.gov for rate for business use of your vehicle necessary expense is one that is information about Form 2106 and its is 51 cents a mile (55 1 helpful and appropriate for your /2 cents a mile instructions, at after June 30, 2011). business. An expense does not have form2106. Information about any to be required to be considered Depreciation limits on vehicles. future developments affecting Form necessary. For 2011, the first-year limit on 2106 (such as legislation enacted depreciation, special depreciation after we release it) will be posted on Form 2106-EZ. You can file Form allowance, and section 179 deduction that page EZ, Unreimbursed Employee for most vehicles is $11,060 ($3,060 Business Expenses, provided you if you elect not to claim the special Purpose of Form were an employee deducting ordinary depreciation allowance). For trucks Use Form 2106 if you were an and necessary expenses for your job and vans, the first-year limit is employee deducting ordinary and and you: Who Must File Form 2106 A Were you an employee during the year? Do not file Form See the instructions for Schedule C, C-EZ, E, or F. B Did you have job-related business expenses? Do not file Form C F Were you reimbursed for any of your business expenses (count only reimbursements your employer did not include in box 1 of your Form W-2)? Did you use a vehicle in your job in 2011 that you also used for business in a prior year? E D Are you claiming job-related vehicle, travel, transportation, meals, or entertainment expenses? Are you a reservist, a qualified performing artist, a fee-basis state or local government official, or an individual with a disability claiming impairment-related work expenses? See the line 10 instructions for definitions. File Form 2106 (but see tes below). G H Are your deductible expenses more than your reimbursements (count only reimbursements your employer did not include in box 1 of your Form W-2)? For rules covering employer reporting of reimbursed expenses, see the instructions for line 7. Is either (1) or (2) true? 1 You owned this vehicle and used the actual expense method in the first year you used the vehicle for business. 2 You used a depreciation method other than straight line for this vehicle in a prior year. File Form File Form 2106 (but see tes). Do not file Form Enter expenses on Schedule A (Form 1040), line 21 or Schedule A (Form 1040NR), line 7. These expenses include business gifts, education (tuition and books), home office, trade publications, etc. Do not file Form tes Generally, employee expenses are deductible only on line 21 of Schedule A (Form 1040) or line 7 of Schedule A (Form 1040NR). But reservists, qualified performing artists, fee-basis state or local government officials, and individuals with disabilities should see the instructions for line 10 to find out where to deduct employee expenses. Do not file Form 2106 if none of your expenses are deductible because of the 2% limit on miscellaneous itemized deductions. v 07, 2011 Cat V

2 Use the standard mileage rate (if States Postal Service (USPS) who and your tax home is wherever you claiming vehicle expense), and performed services involving the work. As an itinerant, you are never Were not reimbursed by your collection and delivery of mail on a away from home and cannot claim a employer for any expense (amounts rural route. travel expense deduction. For more your employer included in box 1 of details on the definition of a tax your Form W-2 are not considered Qualified reimbursements. home, see Pub reimbursements for this purpose). These are the amounts paid by the USPS as an equipment maintenance Generally, you cannot deduct any allowance under a collective expenses for travel away from your Recordkeeping bargaining agreement between the tax home for any period of temporary You cannot deduct expenses for USPS and the National Rural Letter employment of more than 1 year. travel (including meals unless you Carriers Association, but only if such However, this 1-year rule does not used the standard meal allowance), amounts do not exceed the amount apply for a temporary period in which entertainment, gifts, or use of a car or that would have been paid under the you were a federal employee certified other listed property unless you keep 1991 collective bargaining agreement by the Attorney General (or his or her records to prove the time, place, (adjusted for changes in the designee) as traveling in temporary business purpose, business Consumer Price Index since 1991). duty status for the U.S. government relationship (for entertainment and to investigate or prosecute a federal gifts), and amounts of these If you were a rural mail carrier and crime (or to provide support services expenses. Generally, you must also your vehicle expenses were: for the investigation or prosecution of have receipts for all lodging expenses Less than or equal to your qualified a federal crime). (regardless of the amount) and any other expense of $75 or more. reimbursements, do not file Form 2106 unless you have deductible Incidental expenses. The term expenses other than vehicle incidental expenses means: Additional Information expenses. If you have deductible Fees and tips given to porters, For more details about employee expenses other than vehicle baggage carriers, bellhops, hotel business expenses, see: expenses, skip line 1 and do not maids, stewards or stewardesses and include any qualified reimbursements others on ships, and hotel servants in Pub. 463, Travel, Entertainment, in column A on line 7. foreign countries; Gift, and Car Expenses. More than your qualified Transportation between places of Pub. 529, Miscellaneous reimbursements, first complete Part II lodging or business and places where Deductions. of Form Enter your total vehicle meals are taken, if suitable meals can Pub. 587, Business Use of Your expenses from line 29 on line 1 and be obtained at the temporary duty Home (Including Use by Daycare the amount of your qualified site; and Providers). reimbursements in column A on Mailing cost associated with filing Pub. 946, How To Depreciate line 7. travel vouchers and payment of Property. employer-sponsored charge card If you are a rural mail carrier billings.! and received a qualified CAUTION reimbursement, you cannot Incidental expenses do not include Specific Instructions use the standard mileage rate. expenses for laundry, cleaning and pressing of clothing, lodging taxes, or Part I Employee Line 2. The expenses of commuting the costs of telegrams or telephone to and from work are not deductible. calls. Business Expenses and See the line 15 instructions for the Reimbursements definition of commuting. You can use an optional method Fill in all of Part I if you were (instead of actual cost) for deducting reimbursed for employee business Line 3. Enter lodging and incidental expenses only. The amount expenses. If you were not reimbursed transportation expenses connected of the deduction is $5 a day. You can for your expenses, complete steps 1 with overnight travel away from your use this method only if you did not and 3 only. tax home (defined next). Do not pay or incur any meal expenses. You include expenses for meals and cannot use this method on any day entertainment. For more details, you use the standard meal allowance Step 1 Enter Your including limits, see Pub (defined in the instructions for line 5). Expenses Line 1. If you were a rural mail Tax home. Generally, your tax Line 4. Enter other job-related carrier, you can treat the amount of home is your regular or main place of expenses not listed on any other line qualified reimbursement you received business or post of duty regardless of of this form. Include expenses for as the amount of your allowable where you maintain your family business gifts, education (tuition, expense. Because the qualified home. If you do not have a regular or fees, and books), home office, trade reimbursement is treated as paid main place of business because of publications, etc. For details, under an accountable plan, your the nature of your work, then your tax including limits, see Pub. 463 and employer should not include the home may be the place where you Pub amount of reimbursement in your regularly live. If you do not have a income. regular or a main place of business or If you are deducting home office post of duty and there is no place expenses, see Pub. 587 for special You were a rural mail carrier if you where you regularly live, you are instructions on how to report these were an employee of the United considered an itinerant (a transient) expenses. -2- Instructions for Form 2106 (2011)

3 If you are deducting depreciation Overview page select 2011 for the your expenses if either of the or claiming a section 179 deduction, rates in effect for the period January following applies. see Form 4562, Depreciation and 1, 2011 September 30, Select Your employer gave you a fixed Amortization, to figure the Fiscal Year 2012 for the period travel allowance that is similar in form depreciation and section 179 October 1, 2011 December 31, to the per diem allowance specified deduction to enter on Form 2106, However, you can apply the by the Federal Government and you line 4. rates in effect before October 1, verified the time, place, and business Do not include on line 4 any (a) 2011, for expenses of all travel within purpose of the travel for that day. educator expenses you deducted on the United States for 2011 instead of Your employer reimbursed you for Form 1040, line 23, or Form 1040NR, the updated rates. For the period vehicle expenses at the standard line 24, or (b) tuition and fees you October 1, 2011 December 31, mileage rate or according to a flat deducted on Form 1040, line , you must consistently use rate or stated schedule, and you either the rates for the first 9 months verified the date of each trip, mileage, You may be able to take a of 2011 or the updated rates. and business purpose of the vehicle TIP credit for your educational For locations outside the use. expenses instead of a continental United States, the See Pub. 463 for more details. deduction. See Form 8863, Education applicable rates are published each Credits, for details. Allocating your reimbursement. month. You can find these rates on If your employer paid you a single Do not include expenses for meals the Internet at amount that covers meals and and entertainment, taxes, or interest and select the option for Foreign Per entertainment as well as other on line 4. Deductible taxes are Diem Rates. business expenses, you must entered on Schedule A (Form 1040), See Pub. 463 for details on how to allocate the reimbursement so that lines 5 through 9; or Schedule A figure your deduction using the you know how much to enter in (Form 1040NR), line 1. Employees standard meal allowance, including Column A and Column B of line 7. cannot deduct car loan interest. special rules for partial days of travel Use the following worksheet to figure te. If line 4 is your only entry, do and transportation workers. this allocation. not complete Form 2106 unless you are claiming: Step 2 Enter Reimbursement Allocation Performing-arts-related business Reimbursements Received Worksheet expenses as a qualified performing From Your Employer for (keep for your records) artist, Expenses for performing your job Expenses Listed in Step 1 as a fee-basis state or local 1. Enter the total amount of Line 7. Enter reimbursements government official, or reimbursements your received from your employer (or third employer gave you that were Impairment-related work expenses party) for expenses shown in Step 1 not reported to you as an individual with a disability. that were not reported to you in box 1 in box 1 of Form W-2... See the line 10 instructions. If you of your Form W-2. This includes reimbursements reported under code 2. Enter the total amount of your are not required to file Form 2106, expenses for the periods enter your expenses directly on L in box 12 of Form W-2. Amounts covered by this Schedule A (Form 1040), line 21 (or reported under code L are reimbursement... Schedule A (Form 1040NR), line 7). reimbursements you received for business expenses that were not 3. Enter the part of the amount Line 5. Enter your allowable meals included as wages on Form W-2 on line 2 that was your total and entertainment expense. Include because the expenses met specific expense for meals and meals while away from your tax home entertainment..... IRS substantiation requirements. overnight and other business meals 4. Divide line 3 by line 2. and entertainment. Generally, when your employer Enter the result as a decimal Standard meal allowance. pays for your expenses, the (rounded to three places).... Instead of actual cost, you may be payments should not be included in box 1 of your Form W-2 if, within a 5. Multiply line 1 by line 4. Enter able to claim the standard meal reasonable period of time, you: the result here and allowance for your daily meals and Accounted to your employer for the in Column B, line 7... incidental expenses (M&IE) while away from your tax home overnight. expenses, and 6. Subtract line 5 from line 1. Under this method, instead of Were required to return, and did Enter the result here and return, any payment not spent (or in Column A, line 7... keeping records of your actual meal expenses, you deduct a specified considered not spent) for business amount, depending on where you expenses. Step 3 Figure Expenses travel. However, you must still keep If these payments were incorrectly records to prove the time, place, and included in box 1, ask your employer To Deduct on Schedule A business purpose of your travel. for a corrected Form W-2. (Form 1040 or Form 1040NR) The standard meal allowance is Accounting to your employer. Line 9. Generally, you can deduct the federal M&IE rate. For most small This means that you gave your only 50% of your business meal and localities in the United States, this employer documentary evidence and entertainment expenses, including rate is $46 a day. Most major cities an account book, diary, log, meals incurred while away from home and many other localities in the statement of expenses, trip sheets, or on business. However, if you were an United States qualify for higher rates. similar statement to verify the employee subject to the DOT hours You can find the rates that applied amount, time, place, and business of service limits, that percentage is during 2011 on the Internet at www. purpose of each expense. You are increased to 80% for business meals gsa.gov/perdiem. At the Per Diem also treated as having accounted for consumed during, or incident to, any Instructions for Form 2106 (2011) -3-

4 period of duty for which those limits expenses you incurred for services Part II Vehicle are in effect. performed in that job in the total on Expenses Employees subject to the DOT Form 1040, line 24, and attach Form hours of service limits include certain 2106 to your return. These employee There are two methods for computing air transportation employees, such as business expenses are deductible vehicle expenses the standard pilots, crew, dispatchers, mechanics, whether or not you itemize mileage rate and the actual expense and control tower operators; deductions. method. You can use the standard interstate truck operators and mileage rate for 2011 only if: interstate bus drivers; certain railroad Qualified performing artist. You You owned the vehicle and used employees, such as engineers, are a qualified performing artist if you: the standard mileage rate for the first conductors, train crews, dispatchers, 1. Performed services in the year you placed the vehicle in and control operations personnel; and performing arts as an employee for at service, or certain merchant mariners. least two employers during the tax You leased the vehicle and are Line 10. If you are one of the year, using the standard mileage rate for individuals discussed below, special 2. Received from at least two of the entire lease period (except the rules apply to deducting your those employers wages of $200 or period, if any, before 1998). employee business expenses. Any more per employer, You cannot use actual expenses part of the line 10 total that is not 3. Had allowable business for a leased vehicle if you previously deducted according to the special expenses attributable to the used the standard mileage rate for rules should be entered on Schedule performing arts of more than 10% of that vehicle. A (Form 1040), line 21 (or Schedule gross income from the performing A (Form 1040NR), line 7). If you have the option of using arts, and either the standard mileage rate or Ministers. Before entering your 4. Had adjusted gross income of actual expense method, you should total expenses on line 10, you must $16,000 or less before deducting figure your expenses both ways to reduce them by the amount allocable expenses as a performing artist. find the method most beneficial to to your tax-free allowance(s). See you. But when completing Form Pub. 517 for more information. In addition, if you are married, you 2106, fill in only the sections that Armed Forces reservist must file a joint return unless you apply to the method you choose. (member of a reserve component). lived apart from your spouse for all of You are a member of a reserve If you file a joint return, you If you were a rural mail carrier and component of the Armed Forces of must figure requirements (1), (2), and received an equipment maintenance the United States if you are in the (3) separately for both you and your allowance, see the line 1 instructions. Army, Navy, Marine Corps, Air Force, spouse. However, requirement (4) For more information on the or Coast Guard Reserve; the Army applies to the combined adjusted standard mileage rate and actual National Guard of the United States; gross income of both you and your expenses, see Pub the Air National Guard of the United spouse. States; or the Reserve Corps of the Section A General Public Health Service. If you meet all the requirements for Information If you qualify, complete Form 2106 a qualified performing artist, include If you used two vehicles for business and include the part of the line 10 the part of the line 10 amount during the year, use a separate amount attributable to the expenses attributable to performing-arts-related column in Sections A, C, and D for for travel more than 100 miles away expenses in the total on Form 1040, each vehicle. If you used more than from home in connection with your line 24 (or Form 1040NR, line 35), two vehicles, complete and attach a performance of services as a member and attach Form 2106 to your return. second Form 2106, page 2. of the reserves on Form 1040, line Your performing-arts-related business Line 11. Date placed in service is 24, and attach Form 2106 to your expenses are deductible whether or generally the date you first start using return. The amount of expenses you not you itemize deductions. your vehicle. However, if you first can deduct on Form 1040, line 24, is start using your vehicle for personal limited to the regular federal per diem Disabled employee with use and later convert it to business rate (for lodging, meals, and impairment-related work expenses. use, the vehicle is treated as placed incidental expenses) and the Impairment-related work expenses in service on the date you started standard mileage rate (for car are the allowable expenses of an using it for business. expenses), plus any parking fees, individual with physical or mental ferry fees, and tolls. These disabilities for attendant care at his or Line 12. Enter the total number of reserve-related travel expenses are her place of employment. They also miles you drove each vehicle during deductible whether or not you itemize include other expenses in connection deductions. See Pub. 463 for with the place of employment that Change from personal to additional details on how to report enable the employee to work. See business use. If you converted your these expenses. Pub. 463 for more details. vehicle during the year from personal Fee-basis state or local to business use (or vice versa) and government official. You are a If you qualify, enter the part of the you do not have mileage records for qualifying fee-basis official if you are line 10 amount attributable to the time before the change to employed by a state or political impairment-related work expenses on business use, enter the total number subdivision of a state and are Schedule A (Form 1040), line 28 (or of miles driven after the change to compensated, in whole or in part, on Schedule A (Form 1040NR), line 14). business use. a fee basis. These expenses are not subject to Line 13. Do not include commuting If you qualify, include the part of the 2% limit that applies to most other miles on this line; commuting miles the line 10 amount attributable to the employee business expenses. are not considered business miles. -4- Instructions for Form 2106 (2011)

5 See the line 15 instructions below for place your vehicle in service. In later ,000 the definition of commuting. years, you can deduct actual ,500 Line 14. Divide line 13 by line 12 to expenses instead, but you must use If the lease term began before 2002, see Pub. 463 to figure your business use percentage. straight line depreciation. find out if you have an inclusion amount. Change from personal to If you lease your vehicle, you can You may have an inclusion amount business use. If you entered on line use the standard mileage rate, but for a truck or van if: 12 the total number of miles driven only if you use the rate for the entire lease period (except for the period, if Trucks and Vans after the change to business use, multiply the percentage you figured any, before January 1, 1998). And the vehicle s fair by the number of months you drove If you use more than two vehicles, market value on the the vehicle for business and divide complete and attach a second Form The lease term first day of the lease began in: exceeded: the result by , page 2, providing the Line 15. Enter your average daily information requested in lines or $ 19,000 round trip commuting distance. If you through 22. Be sure to include the ,500 went to more than one work location, amount from line 22 of both pages in the total on Form 2106, line ,000 figure the average. You can also deduct state and ,400 Commuting. Generally, local personal property taxes. Enter 2005 or ,700 commuting is travel between your home and a work location. However, these taxes on Schedule A (Form ,000 travel that meets any of the following 1040), line 7. (Personal property ,500 conditions is not commuting. taxes are not deductible on Form ,500 You have at least one regular work 1040NR.) location away from your home and If you are claiming the standard the travel is to a temporary work mileage rate for mileage driven in See Pub. 463 to figure the location in the same trade or more than one business activity, you inclusion amount. business, regardless of the distance. must figure the deduction for each Line 25. If during 2011 your Generally, a temporary work location business on a separate form or employer provided a vehicle for your is one where your employment is schedule (for example, Form 2106 or business use and included 100% of expected to last 1 year or less. See Schedule C, C-EZ, E, or F). its annual lease value in box 1 of your Pub. 463 for more details. Form W-2, enter this amount on line The travel is to a temporary work Section C Actual Expenses 25. If less than 100% of the annual location outside the metropolitan area Line 23. Enter your total annual lease value was included in box 1 of where you live and normally work. expenses for gasoline, oil, repairs, your Form W-2, skip line 25. Your home is your principal place insurance, tires, license plates, and Line 28. If you completed Section D, of business under section similar items. Do not include state enter the amount from line 38. If you 280A(c)(1)(A) (for purposes of and local personal property taxes or used Form 4562 to figure your deducting expenses for business use interest expense you paid. Deduct depreciation deduction, enter the total of your home) and the travel is to state and local personal property of the following amounts. another work location in the same taxes on Schedule A (Form 1040), Depreciation allocable to your trade or business, regardless of line 7. Employees cannot deduct car vehicle(s) (from Form 4562, line 28). whether that location is regular or loan interest. Any section 179 deduction temporary and regardless of distance. Line 24a. If during 2011 you rented allocable to your vehicle(s) (from Line 16. If you do not know the total or leased instead of using your own Form 4562, line 29). actual miles you used your vehicle for vehicle, enter the cost of renting. commuting during the year, figure the Section D Depreciation of Also, include on this line any amount to enter on line 16 by temporary rentals, such as when your Vehicles multiplying the number of days during car was being repaired, except for Depreciation is an amount you can the year that you used each vehicle amounts included on line 3. deduct to recover the cost or other for commuting by the average daily Line 24b. If you leased a vehicle for basis of your vehicle over a certain round trip commuting distance in a term of 30 days or more, you may number of years. In some cases, you miles. However, if you converted your have to reduce your deduction for can elect to claim a special vehicle during the year from personal vehicle lease payments by an amount depreciation allowance or to expense, to business use (or vice versa), enter called the inclusion amount. You may under section 179, part of the cost of your commuting miles only for the have an inclusion amount for a your vehicle in the year of purchase. period you drove your vehicle for passenger automobile if: For details, see Pub business. Vehicle trade-in. If you traded in Passenger Automobiles Section B Standard one vehicle (the old vehicle ) for (Except Trucks and Vans) another vehicle (the new vehicle ) in Mileage Rate And the vehicle s fair 2011, there are two ways you can You may be able to use the standard market value on the treat the transaction. mileage rate instead of actual The lease term first day of the lease 1. You can elect to treat the expenses to figure the deductible began in: exceeded: transaction as a tax-free disposition costs of operating a passenger of the old vehicle and the purchase of vehicle, including a van, sport utility 2010 or $ 18,500 the new vehicle. If you make this vehicle (SUV), pickup, or panel truck or ,500 election, you treat the old vehicle as If you want to use the standard ,500 disposed of at the time of the trade-in. mileage rate for a vehicle you own, 2005 or ,200 The depreciable basis of the new you must do so in the first year you ,500 vehicle is the adjusted basis of the Instructions for Form 2106 (2011) -5-

6 old vehicle (figured as if 100% of the applicable, any special depreciation the passenger automobile limits vehicle s use had been for business allowance claimed for this year. explained in the line 36 instructions purposes) plus any additional amount and is rated at no more than 14,000 you paid for the new vehicle. You Section 179 deduction. If 2011 pounds gross vehicle weight. then figure your depreciation is the first year your vehicle was However, the $25,000 limit does not deduction for the new vehicle placed in service and the percentage apply to any vehicle: beginning with the date you placed it on line 14 is more than 50%, you can Designed to have a seating in service. You make this election by elect to deduct as an expense a capacity of more than nine persons completing Form 2106, Part II, portion of the cost (subject to a yearly behind the driver s seat, Section D. limit). To calculate this section If you do not make the election deduction, multiply the part of the Equipped with a cargo area of at described in (1), you must figure cost of the vehicle that you choose to least 6 feet in interior length that is an depreciation separately for the expense by the percentage on line open area or is designed for use as remaining basis of the old vehicle and 14. The total of your depreciation and an open area but is enclosed by a for any additional amount you paid for section 179 deduction generally cap and is not readily accessible the new vehicle. You must apply two cannot be more than the percentage directly from the passenger depreciation limits. The limit that on line 14 multiplied by the applicable compartment, or applies to the remaining basis of the limit explained in the line 36 That has an integral enclosure, old vehicle generally is the amount instructions. Your section 179 fully enclosing the driver that would have been allowed had deduction for the year cannot be compartment and load carrying you not traded the old vehicle. The more than the income from your job device, does not have seating limit that applies to the additional and any other active trade or rearward of the driver s seat, and has amount you paid for the new vehicle business on your Form no body section protruding more than generally is the limit that applies for 30 inches ahead of the leading edge the tax year it was placed in service, If you are claiming a section of the windshield. reduced by the depreciation! 179 deduction on other allowance for the remaining basis of CAUTION property, or you placed more Special depreciation allowance. the old vehicle. You must use Form than $2,000,000 of section 179 The special depreciation allowance 4562 to compute your depreciation property in service during the year, applies only for the first year a new deduction. You cannot use Form use Form 4562 to figure your section vehicle is placed in service. To qualify 2106, Part II, Section D. 179 deduction. Enter the amount of for the special depreciation the section 179 deduction allocable to allowance, the new vehicle must be If you elect to use the method your vehicle (from Form 4562, line qualified property (see Pub. 463, described in (1), you must do so on a 12) on Form 2106, line 31. chapter 4, for more information). The timely filed tax return (including special allowance is an additional first extensions). Otherwise, you must use te. For section 179 purposes, year deprecation deduction of 100%. the method described in (2). the cost of the new vehicle does not Your total section 179 deduction, include the adjusted basis of the Line 30. Enter the vehicle s actual special depreciation allowance, and vehicle you traded in. cost or other basis. Do not reduce regular depreciation deduction cannot your basis by any prior year s Example. be more than $11,060 for cars and depreciation. However, you must $11,260 for trucks and vans, reduce your basis by any deductible Cost including taxes... $25,000 multiplied by your business use casualty loss, deduction for clean-fuel percentage on line 14. See the line Adjusted basis of trade-in... 3,000 vehicle, gas guzzler tax, alternative 36 instructions for depreciation limits. motor vehicle credit, or qualified Section 179 basis... $22,000 You cannot recover the amount by plug-in electric vehicle credit you which your depreciation deduction Limit on depreciation and claimed. Increase your basis by any section 179 deduction... $11,060* exceeds the depreciation limits for the sales tax paid (unless you deducted year placed in service until after the sales taxes in the year you purchased Smaller of: end of the recovery period for your your vehicle) and any substantial vehicle unless you elect the safe improvements to your vehicle. Section 179 basis, or limit on harbor method of accounting. depreciation... $11,060 If you traded in your vehicle, your Percentage on line Safe harbor method. The safe basis is the adjusted basis of the old harbor method allows you to vehicle (reduced by depreciation Section 179 deduction... $8,295 depreciate during the recovery years. figured as if 100% of the vehicle s use * $3,060 if electing out of special depreciation Under the safe harbor method, you had been for business purposes) plus allowance or not qualified property. are deemed to have elected to use any additional amount you pay for the 50% as additional depreciation new vehicle. See Pub. 463 for more Limit for sport utility and certain allowance rather than 100%. See information. other vehicles. For sport utility and Publication 463, chapter 4, for If you converted the vehicle from certain other vehicles placed in additional information. You elect this personal use to business use, your service in 2011, the portion of method of accounting on your timely basis for depreciation is the smaller of vehicle s cost taken into account in filed return (including extensions) the vehicle s adjusted basis or its fair figuring your section 179 deduction is after you have placed the vehicle in market value on the date of limited to $25,000. This rule applies service. conversion. to any 4-wheeled vehicle primarily designed or used to carry passengers Use the worksheet on the next Line 31. Enter the amount of any over public streets, roads, or page to figure the amount of the section 179 deduction and, if highways that is not subject to any of special depreciation allowance. -6- Instructions for Form 2106 (2011)

7 Depreciation Method and Percentage Chart Line 33 Date Placed in Service (a) 1 (b) 1 (c) Oct. 1 Dec. 31, DB 5.0 % 150 DB 3.75% SL 2.5% Jan. 1 Sept. 30, DB DB 15.0 SL 10.0 Oct. 1 Dec. 31, DB DB SL 20.0 Jan. 1 Sept. 30, DB DB 25.5 SL 20.0 Oct. 1 Dec. 31, DB DB SL 20.0 Jan. 1 Sept. 30, DB DB SL 20.0 Oct. 1 Dec. 31, DB DB 16.4 SL 20.0 Jan. 1 Sept. 30, DB DB SL 20.0 Oct. 1 Dec. 31, DB DB SL 20.0 Jan. 1 Sept. 30, DB DB SL 20.0 Oct. 1 Dec. 31, DB DB SL 17.5 Jan. 1 Sept. 30, DB DB 8.33 SL 10.0 Prior to You can use this column only if the business use of your car is more than 50%. 2 If your car was subject to the maximum limits for depreciation and you have unrecovered basis in the car, you can continue to claim depreciation. See Pub. 463 for more information. Worksheet for the Special More information. See Pub. 463, column (a), enter 200 DB 20% on Depreciation Allowance chapter 4, for more information on the line 33. (keep for your records) special depreciation allowance. For vehicles placed in service Line 32. To figure the basis for before 2011, use the same method 1. Enter the total amount from depreciation, multiply line 30 by the you used on last year s return unless line percentage on line 14. From that a decline in your business use result, subtract the total amount of 2. Multiply line 1 by the requires a change to the straight line any section 179 deduction and percentage on Form 2106, line method. For vehicles placed in 14, and enter the result... special depreciation allowance service during 2011, select the claimed this year (see line 31) or in 3. Enter any section 179 depreciation method and percentage any previous year for this vehicle. deduction... after reading the explanation for each If you purchased the new vehicle column. 4. Subtract line 3 from line 2... after September 8, 2010, and placed it in service before January 1, 2011, Column (a) 200% declining 5. Multiply the applicable limit you may have taken the 100% balance method. You can use explained in the line 36 instructions by the percentage special depreciation allowance in column (a) only if the business use on Form 2106, line 14, and In that case, you are allowed percentage on line 14 is more than enter the result... no depreciation deduction in %. Of the three depreciation unless you elect the safe harbor methods, the 200% declining balance 6. Subtract line 3 from line 5... method (discussed earlier). See Pub. method may give you the largest 7. Enter the smaller of line 4 or 463 to determine your unrecovered depreciation deduction for the first 3 line 6. Add the result to any basis for years (after considering the section 179 deduction (line 3 Line 33. If you used the standard depreciation limit for your vehicle). above) and enter the total on mileage rate in the first year the See the depreciation limit tables on Form 2106, line vehicle was placed in service and the next page. now elect to use the actual expense Column (b) 150% declining Election out. You can elect not to method, you must use the straight balance method. You can use claim the special depreciation line method of depreciation for the column (b) only if the business use allowance for your vehicle. If you vehicle s estimated useful life. percentage on line 14 is more than make this election, it applies to all Otherwise, use the Depreciation 50%. The 150% declining balance property in the same class placed in Method and Percentage Chart above method may give you a smaller service during the year. to find the depreciation method and depreciation deduction than in percentage to enter on line 33. column (a) for the first 3 years. To make the election, attach a To use the chart, first find the date However, you will not have a statement to your timely filed return you placed the vehicle in service (line depreciation adjustment on this (including extensions) indicating that 11). Then, select the depreciation vehicle for the alternative minimum you are electing not to claim the method and percentage from column tax. This may result in a smaller tax special depreciation allowance and (a), (b), or (c). For example, if you liability if you must file Form 6251, the class of property for which you placed a car in service on July 1, Alternative Minimum are making the election. 2011, and you use the method in Tax Individuals. Instructions for Form 2106 (2011) -7-

8 Column (c) straight line 3. After 2005, from October 1 Limits for Passenger Automobiles method. You must use column (c) if through December 31, enter the (Except Trucks and Vans) the business use percentage on line amount figured by multiplying the 14 is 50% or less. The method for result in (1) by the percentage shown Date Vehicle Was these vehicles is the straight line below for the month you disposed of Placed in Service Limit method over 5 years. The use of this the vehicle. column is optional for these vehicles Jan. 1 Dec. 31, $11,060* if the business use percentage on line Month Percentage 14 is more than 50%. Jan. 1 Dec. 31, ,900 te. If your vehicle was used more Jan., Feb., March % Jan. 1 Dec. 31, ,850 than 50% for business in the year it April, May, June % Jan. 1, 2006 Dec. 31, ,775 was placed in service and used 50% or less in a later year, part of the July, Aug., Sept % Jan. 1, 2004 Dec. 31, ,675 depreciation, section 179 deduction, and special depreciation allowance Oct., v., Dec % Jan. 1, 1995 Dec. 31, ,775 previously claimed may have to be * If you elect not to claim the special added back to your income in the Line 36. Using the applicable chart depreciation allowance for the vehicle or the for your type of vehicle, find the date vehicle is not qualified property, the limit is later year. Figure the amount to be you placed your vehicle in service. $3,060. included in income in Part IV of Form 4797, Sales of Business Property. Then, enter on line 36 the corresponding amount from the Limits for Trucks and Vans More information. For more Limit column. Before using the information on depreciating your charts, please read the following Date Vehicle Was vehicle, see Pub definitions. Placed in Service Limit If you placed other business A passenger automobile is a property in service in the 4-wheeled vehicle manufactured Jan. 1 Dec. 31, $11,260*! CAUTION same year you placed your primarily for use on public roads that Jan. 1 Dec. 31, ,100 vehicle in service or you used your is rated at 6,000 pounds unloaded vehicle mainly within an Indian gross vehicle weight or less. Certain Jan. 1 Dec. 31, ,950 reservation, you may not be able to vehicles, such as ambulances, Jan. 1, 2004 Dec. 31, ,875 use the chart. See Pub. 946 to figure hearses, and taxicabs, are not your depreciation. considered passenger automobiles Jan. 1 Dec. 31, ,975 Line 34. If you sold or exchanged and are not subject to the line 36 Jan. 1, 1995 Dec. 31, ,775 your vehicle during the year, use the limits. See Pub. 463 for more details. A truck or van is a passenger * If you elect not to claim the special following instructions to figure the automobile that is classified by the depreciation allowance for the vehicle or the amount to enter on line 34. vehicle is not qualified property, the limit is manufacturer as a truck or van, and If your vehicle was placed in $3,260. that is rated at 6,000 pounds gross service: vehicle weight or less. 1. Before 2006, enter the result of If your vehicle is not subject to any Paperwork Reduction Act tice. multiplying line 32 by the percentage of the line 36 limits, skip lines 36 and For the Paperwork Reduction Act on line 33; 37, and enter the amount from line 35 tice, see your tax return 2. After 2005, from January 1 on line 38. instructions. through September 30, enter the amount figured by multiplying the result in (1) by 50%; or -8- Instructions for Form 2106 (2011)