This is the way Bonus (or Special) depreciation works-
You purchased a vehicle for 39,700 and used Special Depreciation which for 2023 was 80%.
That means 31,760 was 2023 depreciation.
The 2023 limit was 20,200, so that was all you could claim, but the basis was reduced by 31,760 to 7,940.
Second year you can depreciate 32%
.32 x 7940 = 2,540,80 (rounded to 2,541) cap is 19,500, so all of 2,541 is allowed
Third year is 19.2%
Third and fourth 11.52%
Fifth 5.76%
After the fifth year, the remain basis can be depreciated.
According to the IRS:
"Deductions After the Recovery Period
If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will have unrecovered basis in your automobile at the end of the recovery period. If you continue to use the automobile for business, you can deduct that unrecovered basis after the recovery period ends. You can claim a depreciation deduction in each succeeding tax year until you recover your full basis in the car. The maximum amount you can deduct each year is determined by the date you placed the car in service and your business/investment-use percentage. See Maximum Depreciation Deduction, earlier.
Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use and the passenger automobile limits had not applied."
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