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as744
Level 2
September 3, 2023
Question

Safe harbor method for bonus depreciation on vehicles

  • September 3, 2023
  • 5 replies
  • 36 views

Are we able to use the safe harbor method for a car purchased and put into service in 2023?

 

https://www.irs.gov/pub/irs-drop/rp-19-13.pdf

 

Please reference the table on page 9

 

I’m asking because the IRS says: “The safe harbor method does not apply to a passenger automobile placed in service by the taxpayer after 2022”

 

Here is where they say that:

 

https://www.irs.gov/newsroom/irs-provides-a-safe-harbor-method-of-accounting-for-passenger-automobiles-that-qualify-for-the-100-percent-additional-first-year-depreciation#:~:text=The%20safe%20harbor%20method%20does,of%20the%20cost%20of%20the

    5 replies

    Mike9241
    Level 15
    Mike9241Level 15
    Level 15
    September 4, 2023

    see this link for depreciation limits. they depend on type of vehicle and its cost. some vehicles are Luxury vehicles (cost $69K or more in 2023) otherwise they are not).   

    https://www.irs.gov/pub/irs-drop/rp-23-14.pdf -luxury limits

    so

    say cost 69K 1/2 year convention

    year 1 8k bonus + (69K-8K) =61K* 20% $12.2K total 20.2K

    year 2 61K * 32%= 19.52K limited to 19.5K        total to date 39.7K

    year 3 61K *19.2% = 11.712K limited to 11.7K         total to date 51.4K

    year 4 61K * 11.52% = 7.0272K limited to 6.96K     total to date 58.36K

    year 5 61K * 11.52% = 7.0272K limited to 6.96K      total to date 65.32K

    year 6 61.K * 5.76% = 3.5136K limited to 3.68K       total to date 69K

     

    $100k vehicle

    year: 

    1 20.2

    2 19.5

    3 11.7

    4-9 6.960

    10 6.840

     

    for nonluxury

    https://www.walzgroupcpa.com/post/update-on-luxury-auto-depreciation-deductions-for-businesses/ 

    Mike9241
    as744Author
    Level 2
    September 4, 2023

    I am a bit confused. Are you able to help me do the math for my use case on a Tesla Model 3 that costs $50,400 purchased and serviced in 2023?

     

    What is my year 1 - 6?

    Mike9241
    Level 15
    Mike9241Level 15
    Level 15
    September 4, 2023

    assume 7500 ev credit hopefully my math is correct

     

    50400 -7500 =42900

    year 1 42900-8000=34900 *.2= 6980+8000=14980

    year 2 34900 *.32 =11168

    years 3 34900 * .192 6700.8

    years 4&5 34900 *.1152 4020.48

    year 6  34900 *.0576  2010.24

     

     

    Mike9241
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