Rev. Proc. 85-49

SECTION 1. PURPOSE

This revenue procedure modifies Rev. Proc. 82-61, 1982-2 C.B. 849, as modified by Rev. Proc. 83-74, 1983-2 C.B. 593 and Rev. Proc. 84-72, 1984-2 C.B. 735, by increasing the optional standard mileage rate for the business use of an automobile and for the operation of an automobile in connection with rendering gratuitous services to a charitable organization under section 170 of the Internal Revenue Code of 1985. This revenue procedure also states that depreciation is considered to be allowed at 8 cents a mile for 1985 if the optional method for computing the costs of business use of an automobile is used.

SEC. 2 PROCEDURE

.01. Paragraph (1)(a) of subsection .01 of section 3 of Rev. Proc. 82-61, which was modified by Rev. Proc. 83-74, is further modified to read as follows:

Subject to the conditions and limitations set forth in section 3.01(2) below, with respect to transportation expenses paid or incurred after December 31, 1984, deductions will be accepted if computed at a standard mileage rate of (a) 21 cents a mile for the first 15,000 miles of use each year for business purposes, and (b) 11 cents of mile for use for business purposes in excess of 15,000 miles per year.

.02. Paragraph (2)(b) of subsection .01 of section 3 Rev. Proc. 82-61, which was modified by Rev. Proc. 83-74 (inadvertently cited (2)(a)) and Rev. Proc. 84-72, is further modified to read as follows:

In the case of automobiles placed in service for business purposes after December 31, 1979, and in which the optional method was used in 1980, 1981, 1982, 1983, 1984, or 1985, depreciation will be considered to have been allowed at the rate of 7 cents a mile for 1980 and 1981, 7.5 cents a mile in 1982, and 8 cents a mile in 1983, 1984, and 1985, except that if the `actual cost` method was used for one or more of those years the rates above will not apply to any year in which that method was used. This depreciation will act to reduce the basis of the automobile in determining adjusted basis as required by section 1016 of the Code. An automobile placed in service after December 31, 1979, with respect to which the optional method is used is considered to have a useful life of 60,000 miles of business use at the maximum standard mileage rate determined without reference to the age of the vehicle. After 60,000 miles of business use at the maximum standard mileage rate, the automobile will be considered fully depreciated. For purposes of this paragraph, an automobile will be considered to have been driven no more than 15,000 miles in any one year, even though the actual business mileage of the automobile may be greater.

.03. Paragraph 1 of subsection .02 of section 3 of Rev. Proc. 82-61 is amended to read as follows:

With respect to transportation expenses paid after December 31, 1979, for the operation of an automobile in connection with obtaining medical care under section 213 0f the Code, deductions will be accepted if computed at a standard mileage rate of 9 cents a mile. The standard mileage rate of 9 cents a mile will also be accepted with respect to such transportation expenses paid or incurred as moving expenses under section 217. With respect to transportation expenses paid after December 31, 1984, for the operation of an automobile in connection with rendering gratuitous services to a charitable organization under section 170, deductions will be accepted if computed at a standard mileage rate of 12 cents a mile. For expenses paid after December 31, 1979, but before January 1, 1985, the standard mileage rate is 9 cents a mile. Allowance of the standard mileage rate for any of these purposes is subject to the conditions and limitations set forth in the applicable sections of the Code.

SEC. 3. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 82-61, as modified by Rev. Proc. 83-74 and Rev. Proc. 84-72, is further modified.

¹ Also released as News Release IR-85-95, dated September 19, 1985.