Special Rule for Passenger Automobiles Words you may need to know (see Glossary): five star hotel in CannesPlaced in service Recovery period For passenger automobiles, the total depreciation deduction(including the section 179 deduction) that you can claim is limited. Passenger automobile defined.A passenger automobile is any four-wheeled vehicle made primarilyfor use on public streets, roads, and highways and rated at 6,000pounds or less of unloaded gross vehicle weight (6,000 pounds or lessof gross vehicle weight for trucks and vans). It includes any part,component, or other item physically attached to the automobile orusually included in the purchase price of an automobile. The following vehicles are not considered passengerautomobiles for these purposes. An ambulance, hearse, or combination ambulance-hearse useddirectly in a trade or business. A vehicle used directly in the trade or business oftransporting persons or property for pay or hire. Maximum deductions for 1999.Determine the maximum depreciation deduction you can claim for apassenger automobile based on the date you place the automobile inservice. The maximum deduction for 1999, based on the year theautomobile is placed in service is shown in the following table. alberghi a BratislavaMaximum Depreciation Deduction for Passenger Automobiles Year Placed in Service 1st Year 2ndYear 3rdYear 4th Year andLater 1999 $3,060 $5,000 $2,950 $1,775 1998 5,000 2.950 1,775 1997 3,050 1,775 1996 1,775 1995 1,775 1994 1,675 Pre-1994 1,675 You must reduce these limits further if yourbusiness/investment use is less than 100%. Example.On April 15, 1999, Virginia Hart buys a car for $10,000. She usesthe car only in her business. She files her tax return based on thecalendar year. She does not elect a section 179 deduction. UnderMACRS, a car is 5-year property. Because she placed her car in serviceon April 15 and used it only for business, she uses the percentages inTable A-1 to figure her depreciation on the car. Virginia multipliesthe unadjusted basis of her car ($10,000) by 0.20 to get herdepreciation of $2,000 for 1999. This $2,000 is below the maximumdeduction of $3,060 for passenger automobiles placed in service in1999. She can deduct the full $2,000. Exceptions for clean-fuel vehicles.There are two exceptions to the depreciation limits for passengerautomobiles. These exceptions are effective after August 5, 1997, forautomobiles that run on clean fuel. The first exception is a higher maximum depreciationdeduction for clean-fuel vehicles. The maximum deduction for 1999,based on the year the clean fuel vehicle is placed in service is shownin the following table: Maximum Depreciation Deduction for Clean-Fuel Vehicles Year Placed in Service 1stYear 2ndYear 3rdYear 4th Year andLater 1999 $9,280 $14,900 $8,950 $5,325 1998 15,000 8,950 5,425 1997 9,050 5,425 The second exception is for any costs you pay toretrofit parts and components to modify an automobile to run on cleanfuel. These costs are not subject to the limits ondepreciation for automobiles. Only the cost of the automobileexcluding this modification is subject to the limit. For more information on clean-fuel vehicles, see chapter 15 inPublication 535,Business Expenses. Proof of business/investment use.You cannot take any depreciation or section 179 deduction for theuse of listed property (including passenger automobiles), regardlessof the date you placed the property in service, unless you can provebusiness/investment use with adequate records or with sufficientevidence to support your own statements. See What Records Must BeKept, later. Fully depreciated automobile.If you have fully depreciated a car that you are still using inyour business, you can continue to claim your other operating expensesfor the business use of your car. Continue to keep records, asexplained later. Listed Property Worksheetfor Passenger Automobiles Pencil: To assist you in computing your maximum depreciation deduction, thefollowing worksheet is provided. Worksheet for Passenger Automobiles (Subject to Special Limits) Part I 1. Description of property            2. Date placed in service            3. MACRS method (GDS or ADS)            4. Property class and recovery period            5. Convention            6. voyage GlasgowDepreciation rate (from tables)            7. Deduction limit for this year from theMaximum Depreciation Deduction for Passenger Automobilestable            8. Business/investment use percentage            9. Multiply line 7 by line 8. This is youradjusted deduction limit            10. Section 179 deduction claimed this year (notmore than line 9). Enter -0- if this is not the year you placed thecar in service.            Note. 1) If line 10 is equal to line 9, stop here. Your combined section179 and depreciation deduction is limited to line 9.2) If line 10 is less than line 9, complete Part II. Part II 11. Subtract line 10 from line 9. This is themaximum amount you can deduct for depreciation            12. Cost or other basis (reduced by any section179A deduction* or credit for electric vehicles**)            13. Multiply line 12 by line 8. This is yourbusiness/investment cost            14. Section 179 deduction claimed in year youplaced the car in service            15. Subtract line 14 from line 13. This is yourunadjusted basis for depreciation            16. Multiply line 15 by line 6. This is yourmaximum depreciation deduction            17. Enter the lesser of line 11 or line 16. This isyour depreciation deduction            *The section 179A deduction is forclean-fuel vehicles or clean-fuel vehicle refueling property. Whenfiguring the amount to enter on line 12, do not reduce your cost orother basis by any section 179 deduction you claimed for yourcar. **Reduce the basis by the lesser of $4,000or 10% of the cost of the vehicle even if the credit is less than thatamount. The following example shows how to figure your maximum deductionusing the worksheet. Example.On September 26, 1999, Donald Banks bought a car for $18,000. Heused the car 60% for business during 1999. He files his tax returnbased on the calendar year. Under GDS, his car is 5-year property.Donald is electing a section 179 deduction of $1,000 on the car. Theunadjusted basis of his car is $9,800, [($18,000 60%)- $1,000]. He multiplies his unadjusted basis ($9,800) bythe rate in Table A-1 (0.20) to get his tentative depreciationdeduction of $1,960. Because he used the passenger automobile only 60%for business, his depreciation deduction (including the section 179deduction) is limited to $1,836 (60% $3,060). Because Donaldis claiming a section 179 deduction of $1,000 in 1999, hisdepreciation deduction is limited to $836. Worksheet for Passenger Automobiles (Subject to Special Limits) Part I 1. Description of property Automobile 2. Date placed in service   9/26/99 3. MACRS method (GDS or ADS)       GDS 4. Property class and recovery period    5-Year 5. Convention Half-Year 6. Depreciation rate (from tables)       .20 7. Deduction limit for this year from theMaximum Depreciation Deduction for Passenger Automobilestable     $3,060 8. Business/investment use percentage        60% 9. Multiply line 7 by line 8. This is youradjusted deduction limit      1,836 10. Section 179 deduction claimed this year (notmore than line 9). Enter -0- if this is not the year you placed thecar in service.     1,000 Note.1) If line 10 is equal to line 9, stop here. Your combined section179 and depreciation deduction is limited to line 9.2) If line 10 is less than line 9, complete Part II. Part II 11. Subtract line 10 from line 9. This is themaximum amount you can deduct for depreciation      $836 12. Cost or other basis (reduced by any section179A deduction* or credit for electric vehicles**)    $18,000 13. Multiply line 12 by line 8. This is yourbusiness/investment cost    $10,800 14. Section 179 deduction claimed in year youplaced the car in service      1,000 15. Subtract line 14 from line 13. This is yourunadjusted basis for depreciation     $9,800 16. Multiply line 15 by line 6. This is yourmaximum depreciation deduction    $1,960 17. Enter the lesser of line 11 or line 16. This isyour depreciation deduction       $836 *The section 179A deduction is forclean-fuel vehicles or clean-fuel vehicle refueling property. Whenfiguring the amount to enter on line 12, do not reduce your cost orother basis by any section 179 deduction you claimed for yourcar. **Reduce the basis by the lesser of $4,000or 10% of the cost of the vehicle even if the credit is less than thatamount. For a detailed discussion of passenger automobiles, includingleased passenger automobiles, see Publication 463.