Today TaxMama hears from Pam in the TaxQuips Forum, with a good question. “1 purchased 1 new vehicle in 2010 that is used for both of my businesses (Sch C). How do I allocate the new vehicle Sec 179 deprecation expense to both businesses?”
Aaaah Pam,
You would think that would be easy, since you really DO use the vehicle for business.
But…not so easy. Why?
Because at least one of those business will use the vehicle less than 50% of the time.
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Do BOTH of those businesses show a substantial profit?
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If they do, use the FULL allowable Sec 179 on the business where you use the car more than 50% of the time. Reduce the basis – and use straight-line depreciation on the other business.
After all, the total auto deduction for depreciation and Sec 179 are limited anyway.
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So, unless you’ve bought a vehicle that’s over 6,000 pounds, we’re looking at a maximum deduction for all vehicle depreciation, including Sec 179 and bonus depreciation of only $11,160. You can find the depreciation tables here on the SMBiz.com site.
And remember, you can find answers to all kinds of questions about depreciation and other tax issues, free. Where? Where else? At www.TaxMama.com.
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