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Must I pay recapture of Sec. 179 on a vehicle (100% bs on Sch C) when I retire after 5 yrs even if vehicle is fully depreciated? If I keep for personal after I retire?

Forum|Forum|7 years ago
June 3, 2019
4 replies
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I want to take Sec 179 Depreciation on my newly purchased 100% bs vehicle (Sch C) but am worried when I retire in 5 yrs from my business, will I have to pay recapture on the 179. It will be fully depreciated but I will continue to use for personal use. Should I take the 179 now or use Std Mileage. This is my first year of using the new truck.

TurboTax Self Employed Online

Best answer by Coleen3

You must recapture depreciation for your vehicle, if you sell it before it's useful life is over. If you keep it for the useful life, then your Section 179 deduction is spread over the correct amount of time.

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lavender MaryAuthor

What if I continue to use in my retirement from my business my vehicle for my personal use. Say after 5 years of fully depreciating my vehicle, it is now worth around $10,000. Will I have to pay recapture on the value of the vehicle to me even if I have fully depreciated it?

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Coleen3Answer

Employee

You must recapture depreciation for your vehicle, if you sell it before it's useful life is over. If you keep it for the useful life, then your Section 179 deduction is spread over the correct amount of time.

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lavender MaryAuthor

What if it is fully depreciated (5 years) but I continue to use it in retirement as a personal vehicle. Say it's still worth about $10,000. Do I pay recapture (business income) on the $10,000 AND on the amount of 179 depreciation which I would like to take this year? ($4,000)

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Hank101

So I have a 2012 Dodge that I used Section 179 in 2012. Should I have to recapture the trade in value of $25,000? TurboTax is saying that. Didn't I qualify for the useful life of the auto? Or do you always have to recapture the business percentage of the trade in?

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AmeliesUncle

@Hank101 wrote:
So I have a 2012 Dodge that I used Section 179 in 2012. Should I have to recapture the trade in value of $25,000? TurboTax is saying that. Didn't I qualify for the useful life of the auto? Or do you always have to recapture the business percentage of the trade in?

You are mixing up two different kinds of "recapture". In your case, it sounds like you are just subject to 'regular' recapture of depreciation because you sold the vehicle for more than it's Adjusted Basis. That has nothing to do with Section 179, other than that using Section 179 lowered your "Basis" by taking a lot of depreciation at once.

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Opus 17

Employee

I think the original answer was wrong as well. I want to get another expert to review this whole thread.

@Hal_Al can you check the whole discussion?

Generally speaking, whenever you sell a business asset for more than its adjusted cost basis, you have a capital gain and depreciation recapture.

Carl11_2

Employee

Most people have the mistaken belief that depreciation is a permanent deduction. It is not. When you sell or dispose any asset that you have taken depreciation on, you are required to recapture that depreciation in the year of disposition and pay taxes on it if applicable. There is only one scenario where depreciation is potentially not recaptured. That would be if the owner of the depreciated asset dies. But even then, that's now always the case.