For 179 depreciation on a vehicle 5 year period. I...
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Level 2

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?

Not certain if 5 years is 5 tax years or 5 actual years (60 months) and want to avoid recapturing depreciation.  Please cite source if possible
5 Replies
Level 15

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?

If you sell before the 60 month period ends then you will recapture some of the 179 deduction ... it is not just tax years .. so Dec of 2022.  

 

https://www.irs.gov/pub/irs-pdf/p946.pdf

Level 2

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?

Thank you so much for responding.  I cannot find anything in this document which shows it is 60 months and not 5 tax years- can you show me what I am missing?  Everything I am seeing just references years.

Level 15

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?

When something is put into service and listed as an asset the depreciation starts with the month it is active and if you do not keep the asset the full depreciation period you have to recapture the excess depreciation 179 deduction  taken.  So a 5 year property put it into use 11/20 has a class life to 11/25.  Read up on the 179 recapture  and the form 4562 where the recapture happens.  

Level 11

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?


@jrze wrote:
want to avoid recapturing depreciation.  

I think you might be mixing up recapturing depreciation, with recapturing Section 179.  They are two different things.

 

Recapturing depreciation happens when you sell the vehicle for more than its Basis.  If you took Section 179 (and/or regular depreciation) on the entire cost of the vehicle, the Basis is $0.  So if you sell the vehicle for more than $0, you CAN'T avoid depreciation recapture.  It doesn't matter when it is sold, your gain is depreciation recapture.

 

Section 179 recapture is different.  But if I remember correct, when you SELL an asset (vehicle), Section 179 recapture does not apply anyways.  You are just subject to regular depreciation recapture.

Level 15

For 179 depreciation on a vehicle 5 year period. If you purchase a vehicle in Dec 2017, would the 5 years be 2017-2021 or end in Dec 2022? Ie- can you sell on 1/1/22?

That's correct ... I was thinking of converting to personal use or the business use % drops below 50%  ... but you are selling it and because your basis is zero the entire sale is taxable unless you give it away or scrap it (but if the junk yard gives you $50 for the scrap you have sold it for a profit). 

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