What is the best way to depreciate car
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john1922
New Member

What is the best way to depreciate car

Hello I am expecting an income of 90000 (w-2) 8000 (Sch C) and 5000 ( investment). Trying to purchase a business vehicle to boost my sch C income, cost would be around 80,000 (6000+ GWVR suv) what is the best way to depreciate it? Bonus depreciation? section 179?

If I take section 179 does it adjust the vehicle cost basis based on  (80,000-25,900) ?

Can I take straight line or DB 200% on top of the section 179?

Is there a limit for 6000 lb+ suv on the standard depreciation?

What is California's limitation on 179 and bonus depreciation?

2 Replies
Carl
Level 15

What is the best way to depreciate car

First, I assume that the business (not you) will be purchasing the vehicle. If the vehicle is titled in your name, then you are limited to the per-mile deduction (typical if less than100% business use), or actual expenses if 100% business use.

It also matters what kind of business (S-Corp? C-Corp? Multi-member LLC? Single Member LLC? Sole proprietorship?) for determining precisely "how" you report it.  Just keep in mind that regardless of the depreciation method used, when you dispose of that vehicle in the future, all depreciation taken is required by law to be recaptured and taxed in the year of sale or other disposition.

So if you take SEC 179 for 2020 (assuming you have the taxable business income to deduct it from) and then you sell or otherwise dispose of it in 2022, recapturing all that depreciation in 2022 will have a high probability of bumping you into the next higher tax bracket.

Opus 17
Level 15

What is the best way to depreciate car

Are you saying that buying this vehicle will allow you to service more customers and expand your business?  Or that you want to use the tax code to create a "write-off" that makes money for you?   Because I'm at a loss as to how an $80,000 vehicle would ever be a smart purchase for a business that only throws off $8,000 a year.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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