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JeriMCox
New Member

Used the mileage deduction in the past for my schedule c vehicles now I am required to use actual expenses. It wants to know what depreciation method I used in past?

I know that standard mileage doesn't use depreciation so would I just select what I want it to use starting this tax year?
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3 Replies
ColeenD3
Expert Alumni

Used the mileage deduction in the past for my schedule c vehicles now I am required to use actual expenses. It wants to know what depreciation method I used in past?

Standard mileage has its own component of depreciation.

 

Please see this answer from gloriah5200.

 

Yes, when you are selling or trading in a business vehicle, you must adjust your adjusted basis for depreciation allowed or allowable and if you used the standard mileage rate, you must adjust the basis for the allocation depreciation amount per mile for all business mileage deducted.

 

Depreciation component of standard mileage rate.

 

For computing the taxpayer’s basis in an automobile, the standard mileage rate has a component that represents depreciation.

 

For 2020, the depreciation component is 27¢ per mile.

 

If the actual expense method is used in any year after the standard mileage rate method has been used, the straight-line method of depreciation must be used. (Rev. Proc. 2004-64)

 

Depreciation Component of the Standard Mileage RateYear.....................2020..........2019..........2018..........2017..........2016

Rate per mile................27¢............26¢...........25¢............25¢............24¢

 

Note: These rates do not apply for any year in which the actual expenses method was used

 

 

JeriMCox
New Member

Used the mileage deduction in the past for my schedule c vehicles now I am required to use actual expenses. It wants to know what depreciation method I used in past?

I understand that the standard mileage deduction has depreciation already included. However my question is now that I have to switch to actual expenses, Turbo Tax asks "We need to know which Modified Accelerated Cost Recovery System (MACRS) you used the year you started using your vehicle for this business.". I didn't use any MACRS the year we started using the vehicle (2016) because we used the per mile deduction. I understand that after using the per mile deduction you must use the straight line method going forward if switching to actual expenses but I am confused about what to select for previous year method as I didn't choose one for standard mile deduction.

JohnB5677
Expert Alumni

Used the mileage deduction in the past for my schedule c vehicles now I am required to use actual expenses. It wants to know what depreciation method I used in past?

You were confused about what to select for previous year depreciation method .

 

As you stated,  If you transition from standard mileage to actual expense you will use Straight Line Depreciation.  This would suggest that for consistency,  the standard mileage would have been calculated at the same Straight Line Depreciation.

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