Partial section 179 deduction for car

Forum|Forum|3 years ago
March 16, 2023
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Can a partial section 179 deduction on Schedule C be used for a new car that is used 50% for business. Can I also take the standard mileage deduction for business travel. If I can't take the standard mileage deduction in the same year that I use the 179 deduction, can I still use the standard mileage deduction in future years for the same vehicle?

TurboTax Home & Biz Windows

Best answer by Vanessa A

No, you cannot use both standard mileage and section 179.

If you take the actual expenses and depreciation on a new car, you can never take the standard mileage deduction for that vehicle. To use the Standard mileage deduction, you must choose to use it the first year you use the car for business. If you take any Section 179 depreciation, you cannot use the standard mileage on the vehicle in future years.

Vanessa AAnswer

No, you cannot use both standard mileage and section 179.

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hntrustAuthor

Employee

If I use the standard mileage deduction for 2022 and going forward, is there any other depreciation method I can also use besides section 179? If there is another depreciation method to use, would the depreciation be recovered when I sell the car in the future?

Vanessa A

No, you can never use both the standard mileage rate and take depreciation in the same year. Standard mileage does include a preset amount of depreciation, so, your vehicles' basis is reduced, which will likely result in an increase of profit on the sale or lesson your loss.

Per the IRS Pub 463 page 15," If you choose to use the standard mileage rate in the first year, in later years, you can switch from the standard mileage rate to the actual expenses method. If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation for the car’s remaining estimated useful life, subject to depreciation limits"

The useful life of a vehicle is 5 years. So, if you chose to take depreciation next year, then you would have 4 more years of useful life, but you would take depreciation based on 5 years.

If you chose this year, to use any type of accelerated depreciation method, including section 179, and you dispose of the vehicle before the 5 years is up, then you would have to recapture the excess depreciation.

(Edited 3/22/23 @ 8:20AM PST) @hntrust

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