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How do i calculate depreciation equivalent?

Forum|Forum|6 years ago
February 4, 2020
1 reply
18 views

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TurboTax Deluxe Online

Best answer by DawnC

The depreciation equivalent for total miles is a small portion of depreciation that's included when using the standard mileage rate for the business use of your car. When you claim the standard mileage rate when deducting your business car miles, you have to account for 'depreciation equivalent' when you dispose of the car.

The IRS provides a table with the depreciation equivalent rate under "Rate of Depreciation Allowed in Standard Mileage Rate" on page 23 of the 2018 Publication 463, Travel, Gift, and Car Expenses. If you'll see the example on page 24 of the publication above, you'll see how the depreciation equivalent is figured.

That rate is .26 for 2019 - see 2019 Standard Mileage Rates

DawnCAnswer

Level 15

The depreciation equivalent for total miles is a small portion of depreciation that's included when using the standard mileage rate for the business use of your car. When you claim the standard mileage rate when deducting your business car miles, you have to account for 'depreciation equivalent' when you dispose of the car.

The IRS provides a table with the depreciation equivalent rate under "Rate of Depreciation Allowed in Standard Mileage Rate" on page 23 of the 2018 Publication 463, Travel, Gift, and Car Expenses. If you'll see the example on page 24 of the publication above, you'll see how the depreciation equivalent is figured.

That rate is .26 for 2019 - see 2019 Standard Mileage Rates

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Level 2

Do I need to go back and calculate this for every single past year on the car or is there an easier way of calculating this?

Level 15

Yes, you calculate the depreciation equivalent for every year that you claimed the standard vehicle mileage for the vehicle that has been disposed.

If you had claimed actual expenses, you would have reported the depreciation deduction for the same vehicle.

For instance, if you had claimed 1,000 miles in 2018 times the depreciation rate per mile is $.25 per mile equals $250.

The table of Rate of Depreciation Allowed in Standard Mileage Rate is on page 24 of this IRS publication.

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