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uncletax1969
New Member

married filing jointly, partner's a business owner, can I deduct the cost of buying a used car?

We are a married couple based in California

We have decided to buy a used car for my partner's business use.

We typically file jointly. 

Question is, if the used car cost $20,000, and my partner only brings in $10,000 doing real state, and I bring in $100,000 as a salary person (W2 based) at end of 2021, can I deduct 100% of the car cost, or only up-to $10,000?

 

 

Thanks,

3 Replies
Carl
Level 15

married filing jointly, partner's a business owner, can I deduct the cost of buying a used car?

A bit more clarity is needed here.

We have decided to buy a used car for my partner's business use.

Who is "we"? You and your spouse? Or you and your partner?

We typically file jointly.

So is your partner and your spouse one and the same?

Does the partnership therefore file a 1065 Partnership return? Do you live in a community property state?

 

Typically, the cost of a business vehicle is not a deductible expense in the year of purchase. Mostly because the business may not have the taxable business income in that year to make it worthwhile to use the SEC179 deduction on that vehicle. A typical business vehicle that is 100% business use is depreciated over 5 years. (Don't know for sure if that holds true for a used vehicle.)

What I see more commonly with a small business is that the business takes the "per mile" deduction based on business miles driven. That amount changes every year, and it always includes a portion of that for depreciation. For example, the per-mile deduction for a business use passenger vehicle is 57.5 cents per mile for 2020. Of that, 27 cents for each mile is depreciation. For a vehicle that is always 100% business use you can use either the actual expenses method or the per-mile method. But for a vehicle that is not 100% business use, using the actual expenses method is rather difficult to prove in an audit in some cases. So the per-mile deduction is more common.

Overall, if you expect to have the vehicle in the business for more than 5 years, then depending on the miles you expect to drive it each year, the per-mile method can actually be more beneficial tax-wise in the long run.

 

Mike9241
Level 15

married filing jointly, partner's a business owner, can I deduct the cost of buying a used car?

also what type of business?   if the cost is deductible it will limited to business use - business miles (commuting isn't business) to total miles.  

uncletax1969
New Member

married filing jointly, partner's a business owner, can I deduct the cost of buying a used car?

my spouse is in real state. 

I am working as a salary person. 

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