Tax Tip – Can I write off my new SUV? or Used Vehicle?

Tax Tips provided by Don Fitch, CPA

Coordination of §179, 100 percent AFYD, and the luxury automobile limits

Example 1: SUV purchase with §179 election – Joey Bagofdonuts Superstar acquires a new Lincoln Navigator (SUV) for $75,000 on September 1, 2020

For 2020, depreciation is calculated as follows:
Cost                                     $90,000
Less: §179 Deduction                     (25,900)
Subtotal Basis                            64,100
Additional 1st-Year Deduction 100%       (64,100)
Subtotal Basis                                 0
5-Year Regular MACRS (DDB, ½ Yr)         (     0)

Total 2020 Depreciation Deduction         $90,000    (100%)

Example 2: assume example 1: Joey Bagofdonuts Superstar purchases in 2020 without the election to apply §179

For 2020, depreciation is calculated as follows:
Cost                                     $90,000
Less: §179 Deduction                     (    0 )
Subtotal Basis                            90,000
Additional 1st-Year Deduction 100%       (90,000)
Subtotal Basis                                 0
5-Year Regular MACRS (DDB, ½ Yr)         (     0)

Total 2020 Depreciation Deduction         $90,000    (100%)

Example 3: Assume example 2: Joey Bagofdonuts Superstar purchases in 2020 was a used vehicle

For 2020, depreciation is calculated as follows:
Cost                                     $90,000
Less: §179 Deduction                     (    0 )
Subtotal Basis                            90,000
Additional 1st-Year Deduction 100%       (90,000)
Subtotal Basis                                 0
5-Year Regular MACRS (DDB, ½ Yr)         (     0)

Total 2020 Depreciation Deduction         $90,000    (100%)

DON FITCH, CPA
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This blog post is intended to serve solely as an aid in continuing tax education for its blog and email members. Due to the constantly changing nature of the subject of the materials, this product is not appropriate to serve as the sole resource for any tax and
accounting opinion or tax return position, and must be supplemented for such purposes with other current authoritative
materials. The information in this blog post has been carefully compiled from sources believed to be reliable, but its
accuracy is not guaranteed. In addition, Don Fitch Accountancy is not engaged in rendering legal or other professional services and will not be held liable for any actions or suits based on this
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services of a competent professional.

(Updated 02/27/2021 08:05)

Published by Don Fitch, CPA

Offers in Compromise, Wage Levy Releases, Installment Agreements, IRS Audits, and much more IRS assistance. Also, allow us to Help you complete your Tax Returns from 1913 to present (100+ Years) and for any of the 50 States.

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