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Level 1

# Safe harbor method for bonus depreciation on vehicles

Are we able to use the safe harbor method for a car purchased and put into service in 2023?

https://www.irs.gov/pub/irs-drop/rp-19-13.pdf

Please reference the table on page 9

I’m asking because the IRS says: “The safe harbor method does not apply to a passenger automobile placed in service by the taxpayer after 2022”

Here is where they say that:

https://www.irs.gov/newsroom/irs-provides-a-safe-harbor-method-of-accounting-for-passenger-automobil...

5 Replies
Level 15

## Safe harbor method for bonus depreciation on vehicles

see this link for depreciation limits. they depend on type of vehicle and its cost. some vehicles are Luxury vehicles (cost \$69K or more in 2023) otherwise they are not).

https://www.irs.gov/pub/irs-drop/rp-23-14.pdf -luxury limits

so

say cost 69K 1/2 year convention

year 1 8k bonus + (69K-8K) =61K* 20% \$12.2K total 20.2K

year 2 61K * 32%= 19.52K limited to 19.5K        total to date 39.7K

year 3 61K *19.2% = 11.712K limited to 11.7K         total to date 51.4K

year 4 61K * 11.52% = 7.0272K limited to 6.96K     total to date 58.36K

year 5 61K * 11.52% = 7.0272K limited to 6.96K      total to date 65.32K

year 6 61.K * 5.76% = 3.5136K limited to 3.68K       total to date 69K

\$100k vehicle

year:

1 20.2

2 19.5

3 11.7

4-9 6.960

10 6.840

for nonluxury

Level 1

## Safe harbor method for bonus depreciation on vehicles

I am a bit confused. Are you able to help me do the math for my use case on a Tesla Model 3 that costs \$50,400 purchased and serviced in 2023?

What is my year 1 - 6?

Level 15

## Safe harbor method for bonus depreciation on vehicles

assume 7500 ev credit hopefully my math is correct

50400 -7500 =42900

year 1 42900-8000=34900 *.2= 6980+8000=14980

year 2 34900 *.32 =11168

years 3 34900 * .192 6700.8

years 4&5 34900 *.1152 4020.48

year 6  34900 *.0576  2010.24

Level 1

## Safe harbor method for bonus depreciation on vehicles

Whats the differences in math between marcs half-year convention vs mid-quarter convention for that math?

Level 1

## Safe harbor method for bonus depreciation on vehicles

I disagree with your statement here:

see this link for depreciation limits. they depend on type of vehicle and its cost. some vehicles are Luxury vehicles (cost \$69K or more in 2023) otherwise they are not).

https://www.irs.gov/pub/irs-drop/rp-23-14.pdf -luxury limits

Isn't this for leased cars? The table says leased cars. This should not apply if its fully paid in cash?

Is what am I saying correct?