Level 4

All Types of Depr on New Luxury or Standard Sedan Cars

Forum|Forum|5 years ago
May 30, 2021
2 replies
8 views

All Types of Depr on New Luxury or Standard Sedan Cars

I do not have real life situations of clients with business depreciation. I wanted to understand the subject of depreciation in more depth. The entire hypothetical situation, assuming most trying conditions, was constructed based on various examples seen in various books on tax laws. The intention was to provide some background material such that main focus stays on the depreciation question. However, the material in some of these books was not clear about luxury v/s non-luxury cars. There is a mention about cut off of 6,000 pounds weight for Section 179 depreciation.

Let me rephrase the question:

Assuming Tax Payer has satisfied (a) Dollar Limitation (b) Investment Limitation & (c) Taxable Income Limitation, and the Sch C business is highly profitable

What is the Sec 179 or Regular Depr on autos of “all types”?

Any thoughts / clarifications / updates / community members’ experience would be highly appreciated.

Thanks and Regards.

Raj1

ProSeries Tax

This topic has been closed for replies.

George4Tacks

Level 15

A "luxury" auto is one costing about $19,000 or more.

Spend some time with Pub 946 https://www.irs.gov/publications/p946

Answers are easy. Questions are hard!

T

TaxGuyBill

Level 15

@Raj1 wrote:

2021 Tax Year Estimated but most likely Situation

Sch C nominal loss

2022 Tax Year Estimated but most likely Situation: More or less similar to 2021 tax situation.

Take a step back. Are you saying the taxpayer is already EXPECTING a Schedule C loss in 2021 and 2022?

Is this really a business with the goal to make a profit?

At first glance, this seems like a person who wants to write off vehicles right before retiring, and is trying to call an activity a "business" which might not necessarily be a business.

R

Raj1Author

Level 4

Please discard my previous hypothetical example and see if you can clarify about the auto depr issue (which is the main focus of this post) in this much simple and brief new hypothetical example.

Assuming a “Young Adult” (assume any age) Tax Payer with many more years of various taxable incomes has satisfied (a) Dollar Limitation (b) Investment Limitation & (c) Taxable Income Limitation, and has the Sch C business which is highly profitable. Please feel free to assume and use any income amounts for current and future years needed to clarify the matter.

What is the Sec 179 or Regular Depr on autos of “all types”?

Thanks.

George4Tacks

Level 15

@Raj1 did you look at the link I posted for Pub 946.

Assume whatever you want and do some research. https://www.irs.gov/publications/p946#en_US_2020_publink1000107703

Purchase Tax Tools as it has some excellent auto "tools"

The primary reason of this forum is answer software questions and specific tax questions, not to wander into every nook and cranny and other possibilities.

Answers are easy. Questions are hard!

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