We bought an eligible new car on 12/31/2019, but the car had a recall on it, so we only picked up the car on 1/3/2020. On our way home, the signal indicated a defective camera, hence, we returned the car for further diagnosis till 1/15/2020 when the dealer fixed the issue. Since the car was actually starting to service in 2020, what paperwork we need to get it included in the 2020 tax filing for section 179 and bonus depreciation instead of 2019?
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Set up your Business Vehicle in the Vehicle Expenses section of your Business.
Enter your Vehicle as an Asset in order to select a depreciation method.
Be careful claiming Bonus Depreciation or Section 179, as you may have to pay back Depreciation Recapture if you don't use the vehicle for five years.
Click this link for detailed info on Business Use of Vehicles.
Sorry if my original question was not clear that because the car was purchased on 12/31/2019, but put in actual use in 2020 due to recall and defective camera, will that cause trouble as the law asks for the same year deduction when the car was purchased?
Claim the Business Vehicle on your 2020 return, since you didn't start using it for business until 2020.
You can indicate that the car was new when you add it as a Business Asset and the fact that you purchased it in 2019 will not affect your ability to claim the 179 or Bonus Depreciation.
'New' refers to the fact that you are the original owner.
Thanks a ton, and this clarification helps!
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