End of Year Vehicle Purchase; over 6000 lbs

Forum|Forum|5 years ago
December 13, 2020
1 reply
4 views

I have 2020 TT but it isn't complete yet so I can't do the trial and error like I thought. So my question:

Is there any appreciable benefit in deductions to buying a Truck over 6000 pounds and put in service the last week of December. Does the special allowance apply? And if so is that allowance (and any depreciation) reduced for the short period of time within the year of usage?

Business use 95 to 100%

Self Employed/Sole proprietor

M-MTax

Level 15

You can take the special allowance or Sec 179 if you have enough income for Sec 179....either way there's no reduction.

DanielV01

Level 15

One of the great advantages to claiming either Section 179 or Special Depreciation on a vehicle is that it is not capped by when in the year you purchase the vehicle. There are other factors that can limit the amount of deduction you can take, but time of the year is not one of them. For example, Section 179 is capped at the amount of self-employment income you earned for the year; claiming Section 179 cannot produce a loss. To see more on the requirements for claiming either, please click to see the following IRS website: New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act

One thing to keep in mind, however, is that if you do claim either Special Depreciation, regular depreciation (also an option), or Section 179, you will be forced to use Actual Expenses to track and claim business use expense of this vehicle going forward. You will not be allowed to use the Standard Mileage Rate. The only way to use the Standard Mileage Rate is to begin doing so on the date you put the vehicle in service.

In a nutshell, using the Special Depreciation or Section 179 deduction (and bear in mind state tax laws while making your choice; many states do not allow Special Depreciation and may have a lower cap on Section 179 deduction as well) can be more advantageous in the short term in your situation. However, your long-term situation may not be as advantageous, so keep those factors in mind while making your choice.

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WMann

Level 2

DanielVo1, thank you for the information. I cannot find where to enter the vehicle in TT?? The only area for vehicles only lets you do mileage or actual vehicle expense, no option for purchase. Under depreciable expenses, it specifically says, other than vehicles, so I am confused on where to enter the purchase.