Depreciation and section 179 expenses deduction

[elvia_fiorella]

Hi friends I got an issue and I hope you can help me.

I got a truck that It was bought in 2019

1) Truck : 2019 Ford F-150

2) Date of purchase : 01-01-2019

3) Purchase value : $18,000

4) Condition : Used from dealer

5) Payments : $378.00

6) Interests : $230.00

2019 The tax preparer used the section 179

Tax Return 2019

1) Schedule C Profit or Loss From Business ... show up in

Part II Expenses. Enter .......

Line 13 : Depreciation and section 179 expenses deduction ...... $5,017.00

2) Depreciation and Amortization Report ... show up

Prior Depreciation column : 0.0

Current Depreciation column : 0.0

Tax Return 2020

How should the truck to be depreciated for this year

Prior Depreciation : $XXX.XX (?)

Prior AMT : $XXX.XX (?)

I was doing my research work and I found the following

Someone asked

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(Q) Should I leave the section of "Car and Truck Expenses Worksheet: Prior/AMT depreciation" as 0 as I do not how to acquire that information? Or would it be a problem?
I do know the definition of car depreciation but I 1do not know what I need to fill in nor where I can find that information. I'm stuck in the federal review section because of this and I cannot move on. Can I just put in 0 and would it be fine?

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(A) I have the same question. Too bad Turbo Tax does not automatically open a help window telling us how to find the answer. I hope I got it right. I went to last year's complete Fed tax forms, and towards the back I found Form 4562, This form is several pages long. Find the "Depreciation and Amortization Report", go to the line listing the item of interest, e.g. model xxx car, go to the corresponding column next to last titled "Prior Depreciation", and enter that number. Next find the "AMT Depreciation Report" (also part of Form 4562), go to the line listing the item of interest, go to the corresponding column next to last titled "Prior Depreciation", and enter that number. Again I'm not sure why Turbo Tax does not AUTOMATICALLY extract those 2 numbers from the previous year and populate the applicable boxes for the current year. So much more convenient!!

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Attached you can find the reports and some information for 2019

I don't know what to put, I'm in doubt

Thank in advance

[Irene2805 · Accepted solution]

Yes - Leave the "prior depreciation" entry for your truck at zero.   From the Depreciation and Amortization Report you submitted it looks as if you took special depreciation of $5,017 for your tools and equipment, and nothing for your truck.

You can only take 179 depreciation in the first year you use an asset, so you would have to amend your 2019 if you wanted to take advantage of that deduction.

[elvia_fiorella]

Hi Irene.

Thank you for answering my questions.

By 2020 I am using the Standard Method or Standard Mileage Method. This means that I cannot depreciate this Truck. So if he used depreciation he was using Current Method or Actual Expenses Method in Vehicle Expenses.  If he used section 179 he was trying to do accelerated depreciation (used only once) and
not the MARCRS method where trucks are considered five years. Please correct me and if I am wrong tell me where I can find more information about examples how to use this section 179.

Thank you so much

[Irene2805 · 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 and the 179 deduction.  It's possible that your preparer used the standard mileage rate in 2019.  If so, in 2020 you could use either method, whichever benefits you the most.

• 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 switch methods in future years.

You can only use the 179 deduction in the first year you put the item in service.  If you use this deduction, you take most of the depreciation the first year and very little in future years.  

For more information on 179 depreciation, please see Chapter 4 of IRS Pub. 463 - Travel, Gift, and Car Expenses  and IRS issues guidance on Section 179 expenses and Section 168(g) depreciation under Tax Cuts and Jobs ...