Business Vehicle Basis for Depreciation

Forum|Forum|1 year ago
October 12, 2024
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I purchased a large van (over 6000lb) in June 2019 for $25,100 and used it for 84.75% business that year. For 2019 federal taxes, I chose the special depreciation allowance of 100%, which calculated to $21,272 based on business usage. Am I correct in my understanding that $21,272 is considered the vehicle cost basis going forward and that, in subsequent tax years, there would be no further depreciation deduction for this vehicle?

Anonymous_

Employee

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kaijumotoAuthor

Thank you! I determined that starting with my 2021 return (and affecting 2022), my Turbotax return started depreciating the difference between the original cost ($25100) and the 100% special depreciation ($21272) from 2019. I will have to check those returns to see if I owe $ after amending.

What is troubling me now is that in my 2023 return, I can't get past the Car & Truck Expenses Worksheet, Part VI (Vehicle Depreciation Information), box 36i. This box is "Special Depreciation Allowance" and since 2019, for this car, has always been $21,272, which was the 100% special depreciation allowance used in the 2019 return for this car. But when I put that value in now it says "Special Depreciation Allowance is too large. It cannot exceed 30% of eligible basis."

I can get past this if I zero out 36i and put $21,272 in box 37 (Prior Depreciation), but that doesn't seem like the correct thing to do per the instructions. Or I could zero out the Vehicle Basis in 33c.

Either way, the end result is the same -- no depreciation for this vehicle is applied to the return (which is what I want) and the calculated taxes are correct, but the means to get there (what is shown on Form 4562) doesn't look entirely correct.

Is there a correct way to show the prior special depreciation allowance in 36i? Does this matter as long as the end result (calculated tax) is correct?

AmeliesUncle

@kaijumoto wrote:
my Turbotax return started depreciating the difference between the original cost ($25100) and the 100% special depreciation ($21272) from 2019.

If your business percentage increased higher than 84.75%, you are able to depreciate some of the additional amount.

For the error message about the Special Depreciation Allowance, I'm wondering if you checked a wrong box or entered a wrong date somewhere (or accidently said it was under 6000 pounds). In many cases entering the amount under "prior depreciation" would be fine, but you if something is mis-marked somewhere, it could slightly alter the results to give an incorrect amount.