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Vehicle purchased in 2023 deductions

Context: Vehicle purchased and first use in 2023 for 100% business use. Cost is $50,400, and $56,000 with sales tax. It's a Tesla that qualifies for $7,500 EV credit. 


Apparently, in 2023 if I use the bonus deprecation that will prevent me from being able to depreciate the car using MACRS years 2-5 until the recovery period?


The IRS had a safe harbor that fixes that and introduces a way to use MACRS for year 2 - 5: https://www.irs.gov/pub/irs-drop/rp-19-13.pdf


HOWEVER, here is the IRS release saying that safe harbor ends in 2022: https://www.irs.gov/newsroom/irs-provides-a-safe-harbor-method-of-accounting-for-passenger-automobil...


So now I'm confused. At first I thought I can get bonus deprivation year 1 (limit of $20,200) and then apply MACRS year 2 - 5.

This feature is pending. Thanks for your patience.
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4 Replies

Vehicle purchased in 2023 deductions

@Mike9241 answered a similar question, so perhaps he can tackle this one.

Vehicle purchased in 2023 deductions

duplicate post to which a response was already given but the op believes my calcs are wrong.

adding sales tax changes the numbers but not the methodology

this op seems to be hung up on safe harbor which ended in 2022 - for a vehicle purchased in 2023

does someone else want to respond? 




Vehicle purchased in 2023 deductions

duplicate post


Vehicle purchased in 2023 deductions

Yes the safe harbor ended in 2022. It’s what allows you to depreciate year 2 - 5. Without it, if you use bonus depreciation year 1 you COULD NOT depreciate the rest until recovery period ends. Meaning nothing on year 2-5. 

So since safe harbor ended in 2022, how does your example proceed to depreciate starting from year 2 again, which is the whole reason the safe harbor was created. 

Here is the IRS document explaining what I just said:  https://www.irs.gov/pub/irs-drop/rp-19-13.pdf




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