In 2022, we bought a car to use mostly for business (through a single member LLC), using the special depreciation allowance. We've always hit the over 50% rule, no issue but know that the % adjusts the carry forward amounts.
I knew to expect a carry forward amount for Year 2 because of the limited amount you can do for year 1. But what I wasn't expecting is a depreciation deduction Year 3. Even though it was to be an "up to 5 year deduction" depending on how expensive a car was. (under 6000 lbs)
I thought we'd run out of an amount to write off after year 2 because of what carried over.
When I look at the amount Turbo Tax autofills in, the three years combined are higher than the cost of the car.
Can someone explain why this may happen? Am I missing something? I don't want to take a deduction that we aren't allowed but it's auto filled in by TT (home and business) which alerted me it was using 179 carry over number to fill in.
The breakdown:
Cost of car $30,800, no trade in, under 6000 lb SUV
2022 - Special depreciation $16,518 for limited, accounting for approx 86.5% biz use)
2023 - carry forward depreciation auto filled by TT for Year 2 = $9365 (a year of 76% biz use)
2024 - showing carry forward depreciation $7086 (a year of 88% biz use)
Those three figures = 32,969 which is higher than original cost of car.
These #'s have always been calculated / carried over by Turbo Tax. So I hope there's a logical explanation about something I'm missing.
Lastly...
I know we cannot ever go back from actuals to standard mileage instead (which I knew would hurt us this year having driven about 10,000 miles this year where 88% of those were biz miles! But I figured that's the rub of having taken off the bigger amount Year 1. Does the IRS account for anything more on depreciation because of high mileage in this number chosen this year?
Thanks for any advice you can offer.
