a) For the
purpose of determining the "reasonable allowance for depreciation" in the case
of motor vehicles brought into the State before July 1, 2024, the Department
will presume that the average life expectancy of a motor vehicle is 50 months
and that the rate of depreciation that is therefore allowable is 2% of the
selling price each month for such period of prior out-of-State use. A fraction
of a month (including any period which is less than a month after the date of
purchase) will be disregarded.
For motor vehicles brought into the State on or after July 1,
2024, for the purpose of determining the "reasonable allowance for
depreciation", the Department will presume that the average life expectancy of
a motor vehicle is 60 months and that the rate of depreciation that is
therefore allowable is 1.67% of the selling price each month for such period of
prior out-of-State use.
b)
For purposes of this Section, a "month" does not mean a calendar month, but
means a period of one month from the date of purchase. A fraction of a month
(including any period which is less than a month after the date of purchase)
will be disregarded. For example, if the motor vehicle was bought on the fifth
day of one month, one month of depreciation will be considered to have accrued
on the fifth day of the following month. In no case will depreciation be
allowed for any period of time before the physical possession of the motor
vehicle is delivered to the purchaser.
Example: A person purchases a car for $15,000 on July 2 and
does not bring the car into Illinois until September 1. The prior out-of-State
use is only 1 month since partial months are disregarded. The taxable base will
be reduced by $251 (1.67% of $15,000).
c) Effective January 1, 1968, as to tangible
personal property other than motor vehicles brought into the State before July
1, 2024, a "reasonable allowance for depreciation" is deemed by the Department
to be the amount of depreciation determined by use of the straight line method
of depreciation. For purposes of depreciation, the service life for tangible
personal property other than motor vehicles brought into the State on or after
July 1, 2024, shall be the useful life or recovery period allowed under federal
law for like kind of property, or in the event of a settlement agreement, the
useful life or recovery period agreed to in such settlement between the
taxpayer and the Internal Revenue Service or the Department.
