@N-R-G wrote:Questions:
1. Given the car was purchased in 2015, and went into 51% or more business use in 2020, might it be POSSIBLE or advantageous to take the 100% deduction on the car cost in Tax Year 2020? In other words, can it be treated as long-term property and get that 100% deduction?
2. Would the cost basis of the car in year 20XX be a value linearly reduced from the $16000 of 2015? In that case there would not be any cost basis left to use for a 100% bonus deduction, and I should just take the standard mileage deduction?
3. If it qualifies for that 100% deduction, can I choose to take the 100% deduction retroactively, e.g. from 2016 onwards? I am VERY confused on whether the tax changes for 2018 allowed retroactive application of deductions? Confused about retroactive stuff in general 🙂
Thank you.
So it was NOT used at all for business before 2020? Or was it used for business before 2020?
If it was used for business before 2020, have you been taking the Standard Mileage Rate? Or have you been deducting the vehicle using Actual Expenses? Or have you not been deducting it at all, even though it was used for business?
Have you already filed your 2020 tax return, and are considering amending it now? Or are you filing your 2020 tax return now for the first time?
1) If 2020 was the first year it was used for business, yes, you can use the Actual Expense method for your vehicle expenses, which includes the Bonus depreciation option.
2) The "Basis" (similar to cost) for depreciation would be the LOWER of (a) your actual cost, or (b) the Fair Market Value when you converted it to business use. So most likely you would use whatever the Fair Market Value was in 2020.
3) Business deductions only apply for the year the vehicle was used in business. So if the vehicle was first used for business in 2020, then nothing affects the prior years.
