9.3 Listed Property, Passenger Automobiles & Commercial Vehicles

Why vehicles have their own exam chapter

AIPB's depreciation workbook ends with depreciating vehicles under MACRS because a truck is not just "5-year property." It may be listed property, it may be a passenger automobile subject to section 280F annual caps, it may be a heavy SUV with a $32,000 section 179 cap, or it may be a qualified nonpersonal-use work truck that escapes both luxury-auto caps and some substantiation rules. The same firm can also skip depreciation entirely for a year by using the standard mileage rate—but only if it did not already take 179 or accelerated MACRS on that car in year 1.

Harbor Street HVAC's fleet is a typical CB fact pattern: a sedan used by the owner for estimates, a 7,200-pound GVWR passenger SUV, and a cargo van with no rear seating. Three different tax answers.

What is listed property?

Pub 946 chapter 5: listed property is any of the following.

• Passenger automobiles (defined below).
• Business aircraft (with extra 50% and 25% qualified-use tests).
• Any other property used for transportation, unless it is an excepted vehicle.
• Property generally used for entertainment, recreation, or amusement (photographic, phonographic, communication, and video recording equipment).

IRS Topic 704 is explicit: computers and related peripheral equipment are not included as listed property. Pub 946's chapter-5 introduction still says "certain computers," which is leftover language from computers placed in service in older years. For a 2026 study item, follow Topic 704: a Harbor Street office PC is 5-year MACRS property, generally not listed property. Do not apply the >50% listed-property recapture regime to that PC.

Passenger automobile (Pub 946): any four-wheeled vehicle made primarily for public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (or 6,000 pounds or less of gross vehicle weight for trucks and vans). The purchase price includes parts attached at purchase.

Not passenger automobiles: an ambulance or hearse used in the business; a vehicle used directly in the business of transporting persons or property for pay or hire; and a truck or van that is a qualified nonpersonal-use vehicle. Pub 946 still warns that vehicles used for pay or hire, and vehicles over the 6,000-pound threshold, remain "other property used for transportation" and therefore listed, unless they are excepted vehicles.

Excepted / qualified nonpersonal-use vehicles include clearly marked police and fire vehicles, ambulances and hearses used as such, vehicles with loaded GVW over 14,000 pounds designed to carry cargo, bucket trucks, cement mixers, dump trucks, flatbeds, refrigerated trucks, forklifts, delivery trucks with seating only for the driver (or driver plus a folding jump seat), qualified moving vans, specialized utility-repair trucks, school buses, buses with capacity of at least 20 passengers used as passenger buses, and tractors and special-purpose farm vehicles. A cargo van with permanent shelving and company lettering, no passenger seating behind the driver, is the usual contractor exception.

The more-than-50% business-use test

For listed property, qualified business use must be more than 50% of total use to claim section 179, bonus, and accelerated GDS. If the test fails in the placed-in-service year:

• No section 179.
• No special depreciation allowance.
• MACRS must be straight-line over the ADS recovery period (autos and light trucks: 5 years ADS).

If the test is met in year 1 but later falls to 50% or less, recapture the excess of accelerated depreciation (including 179 and bonus) over the depreciation that would have been allowed under ADS straight-line. Increase basis by the recapture amount. Pub 946's Ellen Rye pickup (over 6,000 pounds, so no 280F cap) shows the pattern: 100% business for several years with 179, then 50% business in a later year, and excess depreciation is included in income.

Allocate vehicles by mileage, not by days sitting in the lot: business miles ÷ total miles. Commuting is not business use, even if you take a customer call on the drive. Advertising magnets on a personal commute do not convert the commute. Use by another person is business use only if it is directly connected with your business, is treated as compensation with withholding when required, or is rented at a fair rent.

Investment use can count toward depreciation but does not count as qualified business use for the 50% listed-property test.

Employees generally cannot deduct listed-property depreciation unless the use is for the employer's convenience and required as a condition of employment. Taking a laptop home because you prefer to leave early fails (Pub 946's David Rule engineering example). Section 70110 of P.L. 119-21 made permanent the disallowance of miscellaneous itemized deductions subject to the 2% floor, including most unreimbursed employee vehicle costs. Narrow statutory exceptions remain for certain workers and expenses, but do not invent an employee Form 4562 write-off for a commuting sedan.

Section 280F luxury-auto caps for 2026

Annual section 280F limits cap the total of section 179, bonus, and MACRS for a passenger automobile. They do not apply to passenger autos leased or held for leasing by someone regularly in the leasing business. Unrecovered basis from the cap can be deducted after the recovery period, still subject to the annual cap and the business-use percentage. Other listed property (not passenger autos) does not get that post-recovery tail.

Pub 946's printed tables stop at autos placed in service before 2026. Rev. Proc. 2026-15 (Internal Revenue Bulletin 2026-13) publishes the 2026 owner limits. For this revenue procedure, passenger automobiles include trucks and vans that meet the 280F definition.

Multiply each cap by the business/investment-use percentage. A 75% business auto with bonus has a year-1 ceiling of 0.75 × $20,300 = $15,225, not $20,300.

Worked 280F versus 100% bonus. Harbor Street buys a $45,000 sedan on May 2, 2026, 100% qualified business use, acquired and placed in service after January 19, 2025. Without 280F, 100% bonus would deduct $45,000. Table 1 caps year 1 at $20,300. Remaining tax basis continues into later years, still capped ($19,800 in year 2, and so on). Pub 946's 2025 car example ($14,500 × 20.00% = $2,900) shows the other side: if MACRS is below the cap, the cap does not increase the deduction.

Heavy SUVs versus cargo vans

A four-wheeled passenger SUV rated at 6,200 pounds GVWR is generally not a passenger automobile, so Rev. Proc. 2026-15 dollar caps do not apply. It is still listed transportation property, so the >50% test still applies. Section 179 on that SUV cannot exceed $32,000 in 2026 (Pub 946 What's New). After that 179 amount, 100% bonus can still apply to remaining business basis if the >50% test is met—this is why many firms shop for GVWR over 6,000 pounds.

Harbor Street's cargo van with no seating behind the driver and a six-foot enclosed cargo box typically avoids the SUV 179 cap under Pub 946's cargo-area / no-rear-seat exceptions and may be a qualified nonpersonal-use vehicle. Read the window sticker GVWR and the seating diagram before you code the asset.

Standard mileage versus actual expenses (2026 rates)

IRS standard mileage page (reviewed July 28, 2026):

Worked miles. Harbor Street's owner logs 4,000 substantiated business miles in the first half of 2026 and 3,500 in the second half, plus 100 charitable event miles.

• Business: 4,000 × $0.725 = $2,900; 3,500 × $0.76 = $2,660; total $5,560.
• Charity: 100 × $0.14 = $14 (charitable contribution rules, not Form 4562).

If you use the standard mileage rate, you cannot also deduct depreciation, lease payments, gasoline, oil, insurance, or registration for that year. You can still deduct business parking and tolls (not workplace commuting parking). Interest on a business-use portion of a car loan and personal-property taxes may still be deductible under Pub 463 rules.

First-year choice (Pub 463). For a car you own, you must choose standard mileage in the first year the car is available for business if you want that method at all. Later you may switch to actual expenses, but then you use straight-line over remaining useful life, not MACRS, and you reduce basis by the IRS depreciation component embedded in the miles already claimed. If year 1 used section 179 or a method other than straight-line, you cannot use standard mileage on that car in any later year. For a leased car, standard mileage must be used for the entire lease. You cannot use standard mileage if you use five or more cars in the business at the same time (fleets). Alternating four vehicles is allowed; five simultaneous vehicles is not.

Records

No 179 or depreciation on listed property without adequate records: a log of miles or hours, dates, business purpose, and cost. A weekly log prepared at or near the time of use counts; a reconstructed December narrative usually does not. Form 4562 Part V asks for business miles, commuting miles, other miles, and whether evidence is available. Recapture can occur in any year of the recovery period, so keep the logs that long.

Book versus tax on the fleet

Books might depreciate every vehicle straight-line over five years with no 280F cap. Tax might take $20,300 in year 1 on the sedan, $32,000 of 179 plus bonus on the SUV, and 100% bonus on the cargo van. Temporary differences again. The bookkeeper's tax file stores GVWR, placed-in-service date, business-use percentage, election flags, and mileage logs. The GAAP file stores cost, salvage, useful life, and book accumulated depreciation. Do not let the $20,300 cap "correct" the book entry, and do not let book straight-line "correct" Form 4562.

Harbor Street fleet — three 2026 answers

Assume each vehicle is acquired and placed in service in March 2026, logs support the miles, and taxable income is ample.

Standard-mileage alternative for the sedan only (if chosen in year 1 and no 179/MACRS on that sedan). 4,000 miles Jan–June and 4,000 miles July–Dec: 4,000 × $0.725 = $2,900 plus 4,000 × $0.76 = $3,040, total $5,940, plus tolls. That path forgoes the $13,533 280F-capped depreciation for the year. You cannot mix standard mileage and actual depreciation on the same car in the same year.

Exam traps

1. Calling a 6,800-pound SUV a luxury auto under 280F. Over 6,000 pounds generally leaves 280F; the $32,000 179 SUV cap still applies.
2. Treating commuting as business miles because "I listen to job voicemails."
3. Applying listed-property recapture to a 2026 office computer. Topic 704: computers are not listed property.
4. Using a single 2026 mileage rate for the whole year. Split at July 1: 72.5 then 76 cents.
5. Taking 179 on a car in year 1 and switching to standard mileage in year 2. Pub 463 forbids it.
6. Ignoring 280F because bonus is 100%. The cap replaces the uncapped 100% write-off for passenger autos.
7. 50% business use. The test is more than 50%. Exactly 50% fails accelerated methods.
8. No log, big deduction. Listed-property depreciation without records is the first thing an examiner pulls.

AIPB's Part 2 depreciation hour will mix a GAAP declining-balance item from Chapter 8 with a tax vehicle item from this chapter. Name the system first: books or Form 4562. Then name the overlay: 179, bonus, 280F, SUV cap, or cents-per-mile. Independent OpenExamPrep practice is for that sequencing, not for treating IRS tables as optional.