I bought a new car in January 2018 for sole proprietor use, with >50% business use. I have been using the MACRS method (with half year convention) for depreciation every year. 2024 tax year represents my 7th year using the car. My sole proprietor business drives starting in 2024 represent only 13% of my business vehicle use. Questions:
1. Should I continue to report this vehicle as a business vehicle with 13% business use and claim the miniscule actual vehicle expense deductions (around $400)?
2. If I do this, I see on TurboTax that my depreciation method automatically shifts from "200DB" (200% declining balance?) as it has been in previous years, to "ALT" (alternate method). I see other drop-down options of Straight, prescribed ACRS, 200DB, 150 DB, or ALT. I take it that this ALT is what it should be?
3. Is this the best strategy, since I am still using it for business purposes, even though for much less than 50%?
4. The other option would be to convert to personal use, right? Would there be any benefit to doing this? What are the ramifications of doing this vs. sticking with continuing a small % of business use?
5. Am I correct in thinking that regardless of whether I choose to continue "business use" or convert to personal use, I will be paying back the tax breaks in the form of delayed recapture once I eventually sell the vehicle, right? I plan to keep the car for years and years, even if I eventually retire and shift to 0% business use. Thank you!
