I'm reading the literature for actual expense deductions of a car for rideshare. It's confusing for me. I can't fully grasp the depreciation method with various situations. So I'd like to use an example to make it easier to convey my questions.
A new car was acquired/leased in 2020 (let's say the value was $30k). A 2020 model.
It was used from the start for rideshare and for personal use as well
For 2020 and 2021 the "standard mileage" deduction was used
It will be purchased/paid off this February (2023). Let's say the amount will be 15K. Taxes were not filed for 2022 yet.
The business/overall usage rate of the car fluctuates significantly through the years. So it's basically less than 50% in 2020-2021. It may be over 50% for 2022, and it's expected to be more than 50% for 2023.
1. Can the actual expense method be used with depreciation for 2022? Even though IRS instructions say "standard mileage" should be used for whole leasing period, I read that "lease to buy" is treated differently, and by the time of filing for 2022 this car will be "owned".
2. Assuming for 2022 or 2023, the actual expense will be used, how is depreciation calculated, assuming, say 60% business usage?
3. I read about certain allowances (maximum & special depreciation allowance) but could not understand the difference. Can you explain? Assuming the maximum allowance is used, what year does counting start in terms of maximum since it was a lease. Let's assume for 2023, we start with the actual expense, is it 4th year ($5,760 max)? or 1st year of dep. deduction ($18,100 max)?
4. Can the standard mileage still be used in later years, even when the depreciation deduction is exhausted?
5. How does using it for less than 50% business use for certain years (say 2024 and later) change the calculation for the depreciation?
Thank you for bearing with me.
