Accounting Question (Car expenses/Depreciation)

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billjohnson
Posts: 626
Joined: Thu Nov 04, 2010 10:41 pm

Accounting Question (Car expenses/Depreciation)

Post by billjohnson »

Scenario:
I had a used car that was placed into business in 2011. It was used 60% for business. I took standard milage deduction each year. In June 2014, it was worth roughly $4000 and then the engine went kaput. I sold it for $100. Bought new car for business...

Question: Can I do all of the following:
(1) Take standard mileage deduction for old car for first half of year?
(2) Take actual expense deduction for new car for second half of year?
(3) Deduct the difference ($4000 - $100) as capital loss on my 2014 taxes? Or would it need to be (Initial value of car in 2011 - depreciation portion of standard mileage deduction over the years - $100)? How should i go about this?


Thanks for any advice pointing me in the right direction.

BillJ
Topic Author
billjohnson
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Re: Accounting Question (Car expenses/Depreciation)

Post by billjohnson »

A more simple question. Am I able to do the following for 2014:

(1) Use standard mileage deduction for the old car for first half of year?
-and-
(2) Use actual expense deduction for new car for second half of year?
Topic Author
billjohnson
Posts: 626
Joined: Thu Nov 04, 2010 10:41 pm

Re: Accounting Question (Car expenses/Depreciation)

Post by billjohnson »

billjohnson wrote:Am I able to do both of the following for 2014:
(1) Use standard mileage deduction for the old car for first half of year?
(2) Use actual expense deduction for new car for second half of year?
(bump in hopes someone knows this answer, because Pub463 does not)

Edit to add: Seems Pub463 is suggesting I take some percentage depreciation allowance for the disposition based on the depreciation portion of the standard mileage deduction (~.23).
Last edited by billjohnson on Tue May 03, 2016 4:47 pm, edited 1 time in total.
RudyS
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Re: Accounting Question (Car expenses/Depreciation)

Post by RudyS »

Can't access right now from where I am, but does Schedule C let you input different info or each of the cars? If yes, answer is simple. If not, it might still be possible but I can't help more right now.
Topic Author
billjohnson
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Joined: Thu Nov 04, 2010 10:41 pm

Re: Accounting Question (Car expenses/Depreciation)

Post by billjohnson »

RudyS wrote:Can't access right now from where I am, but does Schedule C let you input different info or each of the cars? If yes, answer is simple. If not, it might still be possible but I can't help more right now.
Thanks for the reply. Schedule C (Part IV) has place for one car, but even so, that part is only completed if you do not fill out Form 4562 (which i do).

This situation has to be somewhat common among Schedule C small business owners…just can't believe it isn't covered anywhere online. I can't find it in my books either (US Master Tax Guide 2014, Lasser's Small Business Taxes 2014, etc.).
mptness
Posts: 178
Joined: Sun Jun 03, 2012 3:54 pm

Re: Accounting Question (Car expenses/Depreciation)

Post by mptness »

billjohnson wrote:A more simple question. Am I able to do the following for 2014:

(1) Use standard mileage deduction for the old car for first half of year?
-and-
(2) Use actual expense deduction for new car for second half of year?
If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees.
Publication 463 (2015), Travel, Entertainment, Gift, and Car Expenses
https://www.irs.gov/publications/p463/ch04.htmlInternal Revenue Service

My interpretation of this is that you are not able to use both in one year. Why not go with actual expenses for both cars for 2014?
jwkde
Posts: 97
Joined: Thu Feb 04, 2010 2:42 pm

Re: Accounting Question (Car expenses/Depreciation)

Post by jwkde »

Yes you can use mileage for Car 1 and actual expenses for car 2

When you use the standard mileage rate that takes into account depreciation so you cannot take a capital loss on car 1.
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