Hello @JessicaH1024,
Most assets must be depreciated over the useful life of the asset as determined by the IRS. The Section 179 election allows all or part of the cost to be expensed in the year it is purchased/placed in service.
To qualify for a Section 179 deduction, the asset must be:
- Tangible (which excludes intangible assets like patents or copyrights as you have to able to touch it)
- Purchased (not leased) for business use
- Used more than 50% in your business
- Placed in service (purchased, acquired, or converted to business use) during the current tax year
- Acquired from a nonrelated party
The Section 179 deduction amount can not exceed your net business income for the year; however, if it does exceed the net business income for the year, you are able to carry the excess over to a future tax year.
You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the business use percentage goes below 50% or less. In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. You also increase the basis of the property by the recapture amount.
Also, if you have taken Section 179 Deduction for an asset, and then dispose of that asset before it reaches the end of its useful life, you may be subject to Depreciation Recapture. This would increase a taxable gain on the asset sale.
Special "Bonus" Depreciation is not subject to recapture
You would enter the vehicle information under assets on your Schedule C.
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