Level 5

Vehicle over 6,000 lbs. Car Dealer needs deduction

Forum|Forum|3 years ago
December 8, 2022
4 replies
21 views

I have a client that is being told by another CPA they can purchase (in December) a 6,000 lb. vehicle, write it off with bonus depreciation in 2022. Then, sell if in January 2023 without recapturing any depreciation as long as they purchase another more expensive that the previous vehicle in December of the following year (2023).

Is this something that can be done, and I don't know about it?

Thanks

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IRonMaN

Level 15

That other CPA should quit listening to his barber

Slava Ukraini!

T

Terry53029

Intuit Community Champion

The new tax law on selling section 1245 property has nothing to do with buying another 1245 property. The entire amount of depreciation claimed on section 1245 property, including bonus depreciation and the section 179 expense allowance, is recaptured as ordinary income to the extent of gain.

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TaxGuyBill

Level 15

1) Dealers (in the business of selling items) don't use Bonus or 179 on Inventory. It isn't a deduction until it is sold.

2) Like-Kind Exchanges (1031 Exchanges) only apply to real estate now, so that idea of 'purchasing a more expensive vehicle' would not apply.

Y

yeknodAuthor

Level 5

The dealer is purchasing it to use as his business vehicle and not as inventory. The other partners CPA is telling them they can purchase a 6K lb. vehicle and write it off in 2021 then they sell it but have to purchase a new one before the end of the following year. Any ideas?