What is "depreciation equivalent for total miles"

[ismael1953]

this is a question in turbo tax

[Anonymous]

I understand this answer.  How is the depreciation for the current year (2018) calculated, assuming standard mileage deduction is being taken?  I ask because the software calculates it, but I don't understand how.

[KrisD]

For 2018 it is .25/mile

[MargaretL · Accepted solution]

Depreciation equivalent for total miles is a small portion of depreciation that is included (by default) when using standard mileage rate for your business car.  When you take standard mileage rate while deducting your business car miles, you must account for 'depreciation equivalent' when disposing of that car. 

The IRS provides a table with the depreciation equivalent rate for each year (page 24 of the link, IRS publication 463)

2012 and 2013: rate is $0.23/mile

2014: rate is $0.22/mile

2015 and 2016: rate is $0.24/mile

Example: You drove 1000 miles as business miles in 2014, 2015 and 2016 and took standard mileage deduction for each year. To calculate your depreciation equivalent - when disposing your car - you must know how many business miles you drove and the depreciation equivalent rate from the IRS (which I listed above). The calculation is as follows:

2014: 1000 miles times $0.22 rate = $220

2015 and 2016: 2000 miles times $0.24 rate =$480

Your total depreciation equivalent (also called total prior depreciation) is $700 (the same amount applies to AMT). Note: When depreciation equivalent is added, it changes your cost basis for the car. 

[lisbethfritz]

what is the rate per mile for 2018??

[lisbethfritz]

what is deduction for 2017

[sjherdez]

Is there another way to figure out the depreciation of my vehicle that I sold last year? I used the same car for the same business since 2002 and do not have the miles used for business for years earlier than 2011

[als033]

Im looking for the same answer. I do not have records before 2015 on hand to gather info on deductions. 

[Frack]

Thanks

[Carl]

The chart at https://bradfordtaxinstitute.com/Free_Resources/IRS-Mileage-Rates.xml.aspx goes back to 2003. You'll have to scroll down a bit more than half way to get to the depreciation per mile chart.

For the years after 2003 up to the time you "can" know your total business miles each year, you can average each of those unknown years, based on the average of your known years.

[MJNK]

IRS Pub. 463 (2022)  Ch. 5 Pg. 24

Rate of Depreciation Allowed in Standard Mileage Rate
Year(s) Depreciation Rate per Mile

2021–2022 0.26
2020 0.27
2019 0.26
2017–2018 0.25
2015–2016 0.24
2014 0.22
2012–2013 0.23
2011 0.22
2010 0.23
2008–2009 0.21
2007 0.19
2005–2006 0.17
2003–2004 0.16
2001–2002 0.15
2000 0.14