When bonus first-year depreciation deductions end at the close of 2004, so will the extra first-year dollar limit for autos, light trucks and vans subject to the luxury auto rules.
Under the basic luxury auto rules, the maximum depreciation deduction allowance (including the amount allowed under the expense election) for passenger autos (other than vans, trucks and electric vehicles) bought in 2004 is $2,960. However, if the auto is qualified property (defined below), the first-year depreciation deduction is increased by $7,650. Thus, the total depreciation allowed in 2004 is $10,610. If the auto is not bought until 2005, the extra allowance would not be available.
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