Author Topic: Taxes: how do I figure out vehicle depreciation?  (Read 1470 times)

skyler

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Taxes: how do I figure out vehicle depreciation?
« on: January 10, 2015, 10:49:58 AM »
This year I am preparing my own tax return for the first time: I am self employed and had a CPA file for me since 2001.
Got stuck on figuring out the depreciation on my vehicle (mostly used for business and some personal use), we purchased it in 2011, used, odometer reading was 31k.
(BTW, we traded our Odyssey for the Pilot on 1-23-11).

Can you guys help me figure out the depreciation , I am using HR Block online software.
I got to the vehicle depreciation part,  it is asking me to choose from the following questions:

a. This is a personal vehicle I started using for business in 2014
b. I stopped using this vehicle for business in 2014
c. This is one of five vehicles or more (fleet) used for business at the same time.

I want to answer (a), but I am unsure, because I started using this vehicle prior to 2014.
Which answer do I select?

Another question:
How do I determine which one: the Half Year Convention or the Mid Quarter Convention label was used in prior tax returns?
 (I am enclosing the snapshot of the Form 4562 Part V from my 2011 return prepared by my CPA)

Further into the worksheet, it is suggesting that I chose the "GDS regular method, 200% declining balance".  I am not sure how it was done before though, can you help me?

lurker

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Re: Taxes: how do I figure out vehicle depreciation?
« Reply #1 on: January 10, 2015, 03:57:36 PM »
See the below link and table from that publication.  Because these are passenger automobiles under 6,000 gross vehicle weight, there are limitations on annual depreciation.  For your Odyssey, purchased in 2005, depreciation was taken as 67.04% of 1,675 (from table) = 1,123.  I believe this is too high because generally the half-year convention (562 instead of 1,123) should apply in the year of disposition (I'm not sure for listed property, and am too lazy to confirm).

It appears to me, your accountant did not answer the questions O,P, and Q for your Pilot, and therefore there was no depreciation taken on that return for the Pilot.  I believe your 2011 depreciation on the Pilot should have been 11,060 x 66.67%.   Might be worth a deeper dive into the proper calculations and possibly amending your return.

For your 2014 return on the Pilot, from the table, a car placed in service in 2011, 4th year maximum is 1,775 x business use %.



http://www.irs.gov/publications/p946/ch05.html#en_US_2013_publink1000107703

Maximum Depreciation Deduction for Passenger Automobiles

Date               4th &
Placed   1st   2nd   3rd   Later
In Service   Year   Year   Year   Years
2013   $11,1601   $5,100   $3,050   $1,875
2012   11,1601   5,100   3,050   1,875
2011   11,0602   4,900   2,950   1,775
2010   11,0602    4,900   2,950   1,775
2009   10,9603   4,800   2,850   1,775
2008   10,9603    4,800   2,850   1,775
2007   3,060   4,900   2,850   1,775
2006   2,960   4,800   2,850   1,775
2005   2,960   4,700   2,850   1,675
2004   10,6104   4,800   2,850   1,675
5/06/2003
12/31/2003   10,7105   4,900   2,950   1,775
1/01/2003
5/05/2003   7,6606   4,900   2,950   1,775

skyler

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Re: Taxes: how do I figure out vehicle depreciation?
« Reply #2 on: January 10, 2015, 09:07:44 PM »
Thank you Lurker,
Looking at the actual Form 4562 (for year 2011), line 25  "Special depreciation allowance for qualified listed property placed in service during the tax year..." shows a value of 7,374
and line 28 shows the total of 8,497 (line 25 with value of 7,374 and the 1,123 from statement #13).

The 2012 return line 28 shows depreciation of 4,272
and on the 2013 return: line 28 lists 2,563