My husband (painting contractor - sole proprietor)...
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My husband (painting contractor - sole proprietor) bought a used cargo van to use exclusively for work. How is this deducted?

We bought a used van and paid $4,800 plus just under $1,000 for repairs (tires, alignment, and battery). Where should this go on his schedule C? Since it is a used van and under $5,000 - should it be just listed as a business equipment purchase and not as a depreciated asset? Are the repairs listed separate? This van will be used 100% for work. Is it best to just take the standard vehicle deduction?

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Anonymous
Not applicable

My husband (painting contractor - sole proprietor) bought a used cargo van to use exclusively for work. How is this deducted?

he must keep records of the business mileage driven. regardless of whether the standard mileage rate is used 57.5/ business mile or he uses actual expenses.    

If you want to use the standard mileage rate to calculate vehicle expenses, you must choose it in the first year you use the vehicle for business. In later years you can choose to use the standard mileage rate or switch to actual expenses.

Once you use actual expenses for the vehicle (even if it's the first year you used it for business), you can't switch to the standard mileage rate. You must continue using actual expenses as long as you use that vehicle for business.

If you use actual expenses, you must have records of all expenses and must allocate those between business and personal use.

 

the standard mileage rate includes an amount for depreciation of the vehicle.  so if you use this method you can't depreciate it.  should the vehicle be sold or traded in you must compare the sales price to the depreciated value (cost less the business miles for each year times the standard mileage depreciation rate for each year) to determine taxable gain or loss.

 

 

Level 15

My husband (painting contractor - sole proprietor) bought a used cargo van to use exclusively for work. How is this deducted?

You'll enter the van in the Business Vehicle Expense section which is under the Business Expenses heading.

Are the repairs listed separate?

No. If the work was done prior to placing the vehicle in service and was necessary to make the vehicle road worthy, add the cost of repairs to what you paid for the vehicle.

This van will be used 100% for work. Is it best to just take the standard vehicle deduction?

I to have a vehicle that is 100% business use in my SCH C business. In my experience, which may not be the same for you (but I would expect it to) I find taking the per-mile deduction to be more advantageous tax-wise. Depreciation is already included in the per-mile deduction. So while the vehicle will appear on the 4562, it will show zero depreciation on that form. But that's expected since depreciation is already included in the per-mile deduction each year.

 

 

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