Question

Special depreciation

Forum|Forum|3 years ago
January 25, 2023
1 reply
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I purchased a boat and a truck in 2022 for the purpose of renting the boat out. The truck is used to deliver the boat to clients. I am planning to use special depreciation for both. That will put me at a significant loss which I plan to use to overcome w 2 income. Turbotax allows me to do so but wanted to confirm with you that I am okay doing so.

Ask the Experts - Tax Law Changes - Jan 2023

DaveF1006

Yes, you are permitted to use special depreciation for your boat and truck as these are considered qualified business property. Keep in mind, in order to claim bonus depreciation , the truck and boat business use must be used for business at least 50% of the time.

According to the IRS rules, you may claim 100% depreciation if:

The taxpayer or its predecessor didn’t use the property at any time before acquiring it.
The taxpayer didn’t acquire the property from a related party.
The taxpayer didn’t acquire the property from a component member of a controlled group of corporations.
The taxpayer’s basis of the used property is not figured in whole or in part by reference to the adjusted basis of the property in the hands of the seller or transferor.
The taxpayer’s basis of the used property is not figured under the provision for deciding basis of property acquired from a decedent.
Also, the cost of the used property eligible for bonus depreciation doesn’t include the basis of property determined by reference to the basis of other property held at any time by the taxpayer (for example, in a like-kind exchange or involuntary conversion).

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K

KsalibaAuthor

Thank you so much, that is very helpful. If I keep records of the miles on an Excel sheet, this would be enough to show that truck is used for business at least 50% of the time?