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Old 12-24-2016, 02:22 AM
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Taxi Repairs and Maintenance: Expense or Depreciate?

I own a small taxi service (sole proprietorship) with just a few vehicles, and I'm confused about which repairs are considered "incidental" and can thus be treated as an expense versus which repairs "add to the property?s value or appreciably prolong its life" and must thus be capitalized. Given that failure to repair, say, a blown head gasket, makes the vehicle inoperable, thereby ending its useful life, one could say that replacing the gasket appreciably prolongs its life. Or do they only mean that repairs that extend the original life of the property must be capitalized? In that case, would putting in a new engine be a repair that should be capitalized?

Also, the previous year, I paid a professional tax preparer to do my taxes, and instead of putting my taxi/vehicle repair and maintenance expenses on line 21 (Schedule C, Part 2 Expenses) under "Repairs and Maintenance," he put them on line 27a "Other Expenses" and entered them in Part V as "Fleet Repairs and Maintenance." Is there any reason my taxi vehicle repairs and maintenance costs should not go on line 21 under "Repairs and Maintenance"?



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Old 12-24-2016, 02:24 PM
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I own a small taxi service (sole proprietorship) with just a few vehicles, and I'm confused about which repairs are considered "incidental" and can thus be treated as an expense versus which repairs "add to the property?s value or appreciably prolong its life" and must thus be capitalized. Given that failure to repair, say, a blown head gasket, makes the vehicle inoperable, thereby ending its useful life, one could say that replacing the gasket appreciably prolongs its life. Or do they only mean that repairs that extend the original life of the property must be capitalized?======>correct; they mean that repairs that extend the original life of the property must be capitalized; You can also claim related expenses, such as insurance, vehicle registration fees, and property taxes on your vehicle, but the IRS places certain conditions on claiming vehicle expenses.

In that case, would putting in a new engine be a repair that should be capitalized?=======>yes it is not a simple repair however, Generally, repairs you make to your business vehicle are currently deductible. However, amounts you pay to recondition and overhaul a business vehicle are capital expenses and are recovered through depreciation.

Also, the previous year, I paid a professional tax preparer to do my taxes, and instead of putting my taxi/vehicle repair and maintenance expenses on line 21 (Schedule C, Part 2 Expenses) under "Repairs and Maintenance," he put them on line 27a "Other Expenses" and entered them in Part V as "Fleet Repairs and Maintenance." Is there any reason my taxi vehicle repairs and maintenance costs should not go on line 21 under "Repairs and Maintenance"?
=======> in general as you said you need to report the costs on your SCh C of 1040 line 21; so you need to contact the pro and ask it to the preparer.



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Old 12-24-2016, 02:57 PM
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note; it is mybad you need to report it on line 27a not on line 21;also, you need to complete Form 4562, Part V, if
you are claiming depreciation on your
vehicle and report the repair costs on line 27a as other exp;however, you need to complete part 4 only if you are claiming car or truck expenses on line 9
and are not required to file Form 4562 for your business



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