Business vehicle section 179 deduction. Can you use the standard mileage in future years after taking a 179 deduction? What happens when the vehicle is disposed of?

[Critter · Accepted solution]

In the first year a vehicle is placed in service you can choose to take the standard mileage rate OR the actual expenses method which includes depreciation & 179 deduction.

If you choose the actual expenses method you MUST use the actual expenses method every year for that vehicle until you dispose of it.

If you choose the standard mileage rate method you can flip flop at will each year.

[angiewakefield]

How would you figure what is best over the life of the vehicle? The Section 179 deduction is large in the first year, but the standard mileage rate will be greater than actual expenses in future years.  What if we dispose of the vehicle, is there recapture involved?

[Critter]

Yes, take the 179 deduction and that is just advance depreciation and when you sell you may have to recapture some of the 179 deduction if you sell it before 5 years are up.  So you have to decide which is best for your situation as there is no set answer for all taxpayers.

[dorabelle-]

What if I select 3 yrs instead of 5 while filling section 179 deduction?

[Critter]

If you have already filed then you can amend the return once the original return has finished processing and you have the original refund in hand.