Hi, how do we take advantage of the section 179 full deduction for a new vehicle used 100% for business? Thanks!

[leannepaul]

We are self-employed filing married jointly, using Turbotax Home and Business. We purchased a new cargo van over 6000 lbs (Ford Transit 250) in 2017. When we enter the new vehicle in the Business Vehicle Expense section, and choose the Actual Vehicle Expenses method we do not get the option to depreciate the full amount of $31,000.  If we enter the vehicle in the Business Assets section, we do see the section 179 option and can deduct the full amount. Should we enter the new vehicle under Business Vehicle Expense, Business Assets, or both? If we have to enter the new vehicle under Business Vehicle Expense only, how can we take advantage of the section 179 deduction? Thank you!

[CathiM · Accepted solution]

You need to enter it in the Vehicle Expense section only. Your Section 179 deduction is limited to your business income however. That could be why you are not seeing all of it. I put the step by step instructions here below. Follow them as see if you can get it.  If not, you can use the comment section to let me know.

To enter your van into TurboTax and make the Section 179 election, go through the steps below.  It will take quite a few screens before you get to the section where you enter the amount of Section 179 deduction you want to take. You will enter your mileage but then elect to use actual expenses (not mileage even though TurboTax may say to take the mileage deduction). See step 13 below.  Then you will answer more questions and enter the value of your van. Eventually you will get to the screen where you enter your Section 179 deduction (see step 15 below)

1. Click on Federal in the bar to your left
2. Under Income & Expenses tab at the top, click Review next to self employment income and expenses
3. On the screen Your 2017 self employment work summary, click Edit next to your business (if you have it  set up)
4. Click on Add Expenses for this work
5. On the screen Tell us about any expenses for business click on Vehicle and Continue at the bottom of page (Vehicle is in the Less Common Expenses near the bottom)
6. Did you use a car or truck for your business? Yes
7. On the screen Tell us about your business vehicle, enter your vehicle information
8. On the next screen, choose Yes I own this vehicle
9. On the next screen answer questions for Was this vehicle available for personal use in 2017?
10. On the next screen answer questions for Let's get some info about how you tracked your business and personal miles in 2017
11. On the next screen answer questions about How do you want to enter your mileage for your Truck? and enter your mileage
12. On the next screen answer questions How many vehicles did you use for your business?
13. On the next screen choose "I'll enter my actual expenses…
14. Continue answering through the screens, enter the purchase price of vehicle etc.
15. On the screen "How much do you want to deduct for the business use of this vehicle?" you can choose how much Section 179 deduction you want to take

[leannepaul]

Hi - this all works as expected until we get to step 15. I do not get the screen that says "How much do you want to deduct for the business use of this vehicle?" After I type in the Purchase Price, I get the screen that says I get a bigger deduction for actual expenses. I click the option to stick with actual expenses. It then goes to the screen for entering additional expenses. I enter the interest paid for my vehicle, then click Continue. Then I get the screen that says "congratulations you've got a total vehicle deduction of $2544". I click Continue, and I'm back to the Vehicle Summary.

[CathiM]

Go back and make sure you have over 50% business use.  This means that the vehicle business miles has to be more than 50% of the total miles.  Something in your questions has eliminated the 179 option. Make sure you answered you own to vehicle also.  Try that and let me know.

[leannepaul]

That's what we suspected, but we can't figure out what has eliminated it. The total miles number is the same as the business miles. And we did answer that we own the vehicle.  We have the old vehicle, which was traded in for the new vehicle, still on the return since we used it for part of the year. For that vehicle the answers are the same (we own it, total miles same as business miles). Could Turbotax be "confused" due to the 2 vehicles?

[CathiM]

Did you enter the new vehicle as a trade in (like kind exchange)?

[leannepaul]

yes

[leannepaul]

To be clear - the old vehicle is designated as the trade-in, not the new one.

[CathiM]

If you buy Section 179 qualifying property with cash and a trade-in, its cost for purposes of the section 179 deduction includes only the cash you paid. That is why you aren't receiving it.  Here is a link to IRS publication 946 <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p946#en_US_2017_publink1000107411">https://www.irs.gov/publications...>

[leannepaul]

The article makes sense. In our case, the trade in value of the old van was $3500. We paid $31,000 cash. So I think we should be able to deduct the $27,500.

[leannepaul]

Our purchase date/trade in date for the vans was 8/1/17.  On the forms, I can see that the new van is designated as 48% business and the old van is designated as 61% (doesn't make sense, both should be 100%). So we decided to change the date to 1/1/17 and see what happens. Now we get the Special Depreciation allowance screen - but it doesn't ask us how much, just if we want to take it. We click Yes and Continue, and go through the last couple of screens. I checked the forms, and now the new van is designated as 100% and the old van is 8%. It's allowing us to take a 50% deduction ($15K).  I don't think Turbotax is calculating this correctly. We have read multiple websites that say we can take the full deduction, and the percentage of business use changing with different dates doesn't make sense.

[CathiM]

I think the problem is the trade in. You may have to enter the disposal and purchase as separate instead of a trade in.  You would have to enter the disposal of the old as the trade in value and enter a new purchase of vehicle for the new vehicle.  You will have to go back and redo but that should get it to work.

[leannepaul]

We finally got back to this and had to do two things to get the Section 179 deduction to work correctly:
1. Change our answer to "Did you track your personal miles?" to "Yes". This corrected the percentage of business use to 100%. We answered "No" previously because this vehicle is only driven for business - no personal at all.
2. Remove the trade-in on the new vehicle. We entered the amount of the trade-in as the disposal, so that got added to income.
Thanks for your help!

[CathiM]

Oh good to hear you got it to work! Thank you for that information!

[gregggggg]

I have similar problem, I think I should be able to deduct the full $30,000 I paid for business truck (I use 80% for business) but turbo tax keeps offering me a portion  like $9,248.