Car depreciation - form 4562

[alira72]

Hi, 

How does TT calculate the depreciation amount for a car in the second year of service, if section 179 was used in the first year?

For the second year on form 4562, TT show a depreciable basis of $4489, but under current depreciation only $575.

Worksheet part VIII :MARCS, asset class 5, depreciation method 200HB and MARCS convention HY?

Thanks

[AmeliesUncle · Accepted solution]

It sounds like the vehicle was under the 6000 pound rule and you did NOT elect OUT of Bonus depreciation.  What you are seeing is due to a rather odd rule in the Tax Code.

Depreciable Basis of $4489.  Bonus allowed 60% of that ($2693), but due to the 6000 pound rule was not allowed if you had already maxxed out the limit with Section 179.  That $2693 can't start to be used until year seven (yes, year seven).

The currently useable non-Bonus amount is 40%, or $1796.  The second-year depreciation rate is usually 32%, and $1796 x 32% is $575.