I bought a passenger automobile with 100% business purpose in 2023 at $39700 and took special depreciation allowance of $20200. For 2024, I should be able to deduct $19,500 but TurboTax says I can only take $2541. Here is my reasons why I think Turbo tax is wrong but I need someone to confirm:
Luxury Auto “Cap” Rules
For passenger automobiles placed in service during 2023, the IRS sets “luxury auto” depreciation caps. With bonus depreciation, the first-year cap was $20,200 (which aligns with the amount I claimed).
Remaining Adjusted Basis
Original cost: $39,700
2023 depreciation: $20,200
Remaining basis going into 2024: $39,700 – $20,200 = $19,500
Second-Year Limit for 2024
For a vehicle placed in service in 2023, the second-year depreciation cap is $19,500.
Actual Depreciation in Year 2
I can claim the lesser of (a) the second-year cap ($19,500) or (b) your remaining adjusted basis ($19,500). In this case, both are exactly $19,500, so I can fully depreciate $19,500 in 2024.
