Vehicle Purchase

[IBishop]

I have a small business that I purchased a new truck for in 2021. I was able to depreciate this truck 100% for 2021 for the irs bonus depreciation. They are also doing this for 2022 from what I have read. My question is if I purchase a new truck this year to replace my current truck, can I use this deduction with no penalties or recapture?

[AdamNe]

Hello @IBishop !

Yes, as long as the vehicle you purchase meets the requirements, you can elect to use bonus depreciation again. 

However, if you trade in the old truck or otherwise sell or dispose of it, you will need to report the disposition on your taxes, and you will have to pay taxes on sale as your basis in the old truck is now $0. In TurboTax, you do this by making sure you mark the box that indicates the asset in question has been sold or disposed of in the tax year. TurboTax will then ask you the relevant questions about the sale. 

I hope this helps! 

Best,

Adam, EA

TurboTax Live Expert