Business & farm

The questions are in TurboTax Online for your vehicle choices. First you must establish the business use percentage of the vehicle.  A vehicle is called 'Listed Property'. Generally, a vehicle is not exclusively used for your business, but would also have personal mileage which would not be allowed to be deducted. A record of your business miles divided by the total miles driven in a year would provide your business use percentage.

If that business use percentage is greater than 50% (51% or higher) then you can choose to use special depreciation if you like.  This is simply a law that allows you to take a large depreciation expense in the first year an asset is placed in service and, yes, there would be little or no deduction in future years if you choose special bonus depreciation and/or Section 179.

• More than 50% business use requirement. See IRS Publication 463  -- You must use the property more than 50% for business to claim any section 179 deduction. If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. The result is the cost of the property that can qualify for the section 179 deduction.
• More-than-50%-use test.  Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car.
  • If your business use is 50% or less, you must use the straight line method to depreciate your car. This is explained later under Car Used 50% or Less for Business

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