Recapture event
Recapture event -
(1) Qualified clean-fuel vehicle property -
(i) In general. A recapture event occurs if, within 3 full years from the date a vehicle of which qualified clean-fuel vehicle property is a part is placed in service, the property ceases to be qualified clean-fuel vehicle property. Property ceases to be qualified clean-fuel vehicle property if -
(A) The vehicle is modified by the taxpayer so that it may no longer be propelled by a clean-burning fuel;
(B) The vehicle is used by the taxpayer in a manner described in section 50(b);
(C) The vehicle otherwise ceases to qualify as property defined in section 179A(c); or
(D) The taxpayer receiving the deduction under section 179A sells or disposes of the vehicle and knows or has reason to know that the vehicle will be used in a manner described in paragraph (b)(1)(i) (A), (B), or (C) of this section.
(ii) Exception for disposition. Except as provided in paragraph (b)(1)(i)(D) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of qualified clean-fuel vehicle property is not a recapture event.
(2) Qualified clean-fuel vehicle refueling property -
(i) In general. A recapture event occurs if, at any time before the end of its recovery period, the property ceases to be qualified clean-fuel vehicle refueling property. Property ceases to be qualified clean-fuel vehicle refueling property if -
(A) The property no longer qualifies as property described in section 179A(d);
(B) The property is no longer used predominantly in a trade or business (property will be treated as no longer used predominantly in a trade or business if 50 percent or more of the use of the property in a taxable year is for use other than in a trade or business);
(C) The property is used by the taxpayer in a manner described in section 50(b); or
(D) The taxpayer receiving the deduction under section 179A sells or disposes of the property and knows or has reason to know that the property will be used in a manner described in paragraph (b)(2)(i) (A), (B), or (C) of this section.
(ii) Exception for disposition. Except as provided in paragraph (b)(2)(i)(D) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of qualified clean-fuel vehicle refueling property is not a recapture event.
(c) Recapture date -
(1) Qualified clean-fuel vehicle property. The recapture date is the actual date of the recapture event unless an event described in paragraph (b)(1)(i)(B) of this section occurs, in which case the recapture date is the first day of the recapture year.
(2) Qualified clean-fuel vehicle refueling property. The recapture date is the actual date of the recapture event unless the recapture occurs as a result of an event described in paragraph (b)(2)(i) (B) or (C) of this section, in which case the recapture date is the first day of the recapture year.
(d) Recapture amount -
(1) Qualified clean-fuel vehicle property. The recapture amount is equal to the benefit of the section 179A deduction allowable multiplied by the recapture percentage. The recapture percentage is -
(i) 100, if the recapture date is within the first full year after the date the vehicle is placed in service;
(ii) 66 2/3, if the recapture date is within the second full year after the date the vehicle is placed in service; or
(iii) 33 1/3, if the recapture date is within the third full year after the date the vehicle is placed in service.
(2) Qualified clean-fuel vehicle refueling property. The recapture amount is equal to the benefit of the section 179A deduction allowable multiplied by the following fraction. The numerator of the fraction equals the total recovery period for the property minus the number of recovery years prior to, but not including, the recapture year. The denominator of the fraction equals the total recovery period.
(e) Basis adjustment. As of the first day of the taxable year in which the recapture event occurs, the basis of the vehicle of which qualified clean-fuel vehicle property is a part or the basis of qualified clean-fuel vehicle refueling property is increased by the recapture amount. For a vehicle or refueling property that is of a character that is subject to an allowance for depreciation, this increase in basis is recoverable over its remaining recovery period beginning as of the first day of the taxable year in which the recapture event occurs.
(f) Application of section 1245 for sales and other dispositions. For purposes of section 1245, the amount of the deduction allowable under section 179A(a) with respect to any property that is (or has been) of a character subject to an allowance for depreciation is treated as a deduction allowed for depreciation under section 167. Therefore, upon a sale or other disposition of depreciable qualified clean-fuel vehicle refueling property or a depreciable vehicle of which qualified clean-fuel vehicle property is a part, section 1245 will apply to any gain recognized to the extent the basis of the depreciable property or vehicle was reduced under section 179A(e)(6) net of any basis increase described in paragraph (e) of this section.
(g) Examples. The following examples illustrate the provisions of this section:
(1) Qualified clean-fuel vehicle property -
(i) In general. A recapture event occurs if, within 3 full years from the date a vehicle of which qualified clean-fuel vehicle property is a part is placed in service, the property ceases to be qualified clean-fuel vehicle property. Property ceases to be qualified clean-fuel vehicle property if -
(A) The vehicle is modified by the taxpayer so that it may no longer be propelled by a clean-burning fuel;
(B) The vehicle is used by the taxpayer in a manner described in section 50(b);
(C) The vehicle otherwise ceases to qualify as property defined in section 179A(c); or
(D) The taxpayer receiving the deduction under section 179A sells or disposes of the vehicle and knows or has reason to know that the vehicle will be used in a manner described in paragraph (b)(1)(i) (A), (B), or (C) of this section.
(ii) Exception for disposition. Except as provided in paragraph (b)(1)(i)(D) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of qualified clean-fuel vehicle property is not a recapture event.
(2) Qualified clean-fuel vehicle refueling property -
(i) In general. A recapture event occurs if, at any time before the end of its recovery period, the property ceases to be qualified clean-fuel vehicle refueling property. Property ceases to be qualified clean-fuel vehicle refueling property if -
(A) The property no longer qualifies as property described in section 179A(d);
(B) The property is no longer used predominantly in a trade or business (property will be treated as no longer used predominantly in a trade or business if 50 percent or more of the use of the property in a taxable year is for use other than in a trade or business);
(C) The property is used by the taxpayer in a manner described in section 50(b); or
(D) The taxpayer receiving the deduction under section 179A sells or disposes of the property and knows or has reason to know that the property will be used in a manner described in paragraph (b)(2)(i) (A), (B), or (C) of this section.
(ii) Exception for disposition. Except as provided in paragraph (b)(2)(i)(D) of this section, a sale or other disposition (including a disposition by reason of an accident or other casualty) of qualified clean-fuel vehicle refueling property is not a recapture event.
(c) Recapture date -
(1) Qualified clean-fuel vehicle property. The recapture date is the actual date of the recapture event unless an event described in paragraph (b)(1)(i)(B) of this section occurs, in which case the recapture date is the first day of the recapture year.
(2) Qualified clean-fuel vehicle refueling property. The recapture date is the actual date of the recapture event unless the recapture occurs as a result of an event described in paragraph (b)(2)(i) (B) or (C) of this section, in which case the recapture date is the first day of the recapture year.
(d) Recapture amount -
(1) Qualified clean-fuel vehicle property. The recapture amount is equal to the benefit of the section 179A deduction allowable multiplied by the recapture percentage. The recapture percentage is -
(i) 100, if the recapture date is within the first full year after the date the vehicle is placed in service;
(ii) 66
2/3, if the recapture date is within the second full year after the date the vehicle is placed in service; or
(iii) 33
1/3, if the recapture date is within the third full year after the date the vehicle is placed in service.
(2) Qualified clean-fuel vehicle refueling property. The recapture amount is equal to the benefit of the section 179A deduction allowable multiplied by the following fraction. The numerator of the fraction equals the total recovery period for the property minus the number of recovery years prior to, but not including, the recapture year. The denominator of the fraction equals the total recovery period.
(e) Basis adjustment. As of the first day of the taxable year in which the recapture event occurs, the basis of the vehicle of which qualified clean-fuel vehicle property is a part or the basis of qualified clean-fuel vehicle refueling property is increased by the recapture amount. For a vehicle or refueling property that is of a character that is subject to an allowance for depreciation, this increase in basis is recoverable over its remaining recovery period beginning as of the first day of the taxable year in which the recapture event occurs.
(f) Application of section 1245 for sales and other dispositions. For purposes of section 1245, the amount of the deduction allowable under section 179A(a) with respect to any property that is (or has been) of a character subject to an allowance for depreciation is treated as a deduction allowed for depreciation under section 167. Therefore, upon a sale or other disposition of depreciable qualified clean-fuel vehicle refueling property or a depreciable vehicle of which qualified clean-fuel vehicle property is a part, section 1245 will apply to any gain recognized to the extent the basis of the depreciable property or vehicle was reduced under section 179A(e)(6) net of any basis increase described in paragraph (e) of this section.
(g) Examples. The following examples illustrate the provisions of this section: