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Business Vehicle Depreciation - Older Vehicle not accurate

Forum|Forum|6 years ago
April 19, 2020
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I have a business vehicle that I purchased in 2014. I purchased a second business vehicle in December 2019. When reviewing the depreciation amounts, I noticed my 2014 vehicle is less than 30% depreciated. The software is telling me I'm in year 6 of depreciation and limited the depreciation amount to $1783 (which I think should actually be $1875).

Per the SW, my second vehicle qualified for $18,100 1st year Section 179 depreciation and looks like its on track to fully depreciate in 6 years.

How do I "catch up" the depreciation on my older vehicle?

Thanks

TurboTax Home & Biz Windows

Best answer by AmeliesUncle

@CathE wrote:
I have a business vehicle that I purchased in 2014. I purchased a second business vehicle in December 2019. When reviewing the depreciation amounts, I noticed my 2014 vehicle is less than 30% depreciated. The software is telling me I'm in year 6 of depreciation and limited the depreciation amount to $1783 (which I think should actually be $1875).
Per the SW, my second vehicle qualified for $18,100 1st year Section 179 depreciation and looks like its on track to fully depreciate in 6 years.
How do I "catch up" the depreciation on my older vehicle?
Thanks

It may be only 30% depreciated because of the Luxury Limitations and/or it was not 100% business use. Prior to 2018, most vehicles took WAY more than 6 years to be fully depreciated.

It could be $1783 rather than $1875 because it is not 100% business use.

DON'T use Section 179 unless you elect OUT of Bonus depreciation. Unless there is a specific reason why you want to use Section 179, using Bonus depreciation is probably better.

A

Anonymous

do you have the prior year returns 2014 -2018 to check the depreciation history. for TT years it's under the asset. maybe some prior depreciation was not included. this would be especially true if you haven't been using TT since 2014.

here's a link to rev. proc. 2014-21 (pages 4 and 5) which specifies the MAXIMUM depreciation tahat can be taken each year on a vehicle plce inservice in 2014 assuming 100% business use. If you used an improper method you would need to correct it by filling for 3115 with the 2019 return. without being able to see all the prior year returns, I can not say for sure you used an improper method. if you used a proper method (and there are alternatives which allow less than the max) you would have to continue with that method or file form 3115 to change it.

https://www.irs.gov/pub/irs-drop/rp-14-21.pdf

A

AmeliesUncleAnswer

@CathE wrote:
I have a business vehicle that I purchased in 2014. I purchased a second business vehicle in December 2019. When reviewing the depreciation amounts, I noticed my 2014 vehicle is less than 30% depreciated. The software is telling me I'm in year 6 of depreciation and limited the depreciation amount to $1783 (which I think should actually be $1875).
Per the SW, my second vehicle qualified for $18,100 1st year Section 179 depreciation and looks like its on track to fully depreciate in 6 years.
How do I "catch up" the depreciation on my older vehicle?
Thanks

It may be only 30% depreciated because of the Luxury Limitations and/or it was not 100% business use. Prior to 2018, most vehicles took WAY more than 6 years to be fully depreciated.

It could be $1783 rather than $1875 because it is not 100% business use.

DON'T use Section 179 unless you elect OUT of Bonus depreciation. Unless there is a specific reason why you want to use Section 179, using Bonus depreciation is probably better.