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Old 03-08-2017, 11:30 AM
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New Car Depreciation Help

Hi, I'm 33, and have been able to do my taxes on my own for my entire life until now. For the first time, I'm looking for help from people much smarter than me.

I've owned a small business for 8 years (single-member LLC) and on Nov. 30, 2016, I bought my first company car. I bought it IN the company's name. The full cost was $49,985. I paid $28,835 up front (and an additional $7,000 came from a trade-in). I plan to pay the remainder in April. I would like to take the maximum possible off of my taxes for 2016... as much of the $29k as I can. I know I need to fill out a 'Form 4562- Depreciation' for this. My question is: Which depreciation method should I use? And if you are willing, please tell me exactly what should go in each box underneath this.

I would be forever grateful for any and all response to my inquiry. Like seriously, I'll send you a Christmas card if you help me out. Thanks in advance.

-Ben



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Old 03-09-2017, 11:53 AM
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I've owned a small business for 8 years (single-member LLC) and on Nov. 30, 2016, I bought my first company car. I bought it IN the company's name. The full cost was $49,985. I paid $28,835 up front (and an additional $7,000 came from a trade-in). I plan to pay the remainder in April. I would like to take the maximum possible off of my taxes for 2016... as much of the $29k as I can. I know I need to fill out a 'Form 4562- Depreciation' for this. My question is: Which depreciation method should I use? ========>>Sec 179 doesn?t increase the total amount you can deduct, but it allows you to get your entire depreciation deduction in one year, rather than taking it a little at a time over the term of an asset?s useful life which can be up to 5 years. This is called first-year expensing or Section 179 expensing. Say, you buy a $42985 biz auto for your business. Under the regular depreciation rules (using the MACRS depreciation method), you would have to deduct a portion of the cost each year over its five-year useful life as follows:
2013: $8597; 2014: $13755; 2015: $8253; 2016: $4952. But by deducting the auto under Sec 179 instead, you can deduct the entire $ 500Kexpense from your income taxes in one year. The Section 179 Deduction is now $500k for 2016. This means businesses can deduct the full cost of equipment from their 2016 taxes, up to $500k, with a "total equipment purchased for the year" threshold of $2M This is a large increase from other years, and means businesses can deduct the full cost of equipment from their 2016 taxes, up to $500k. For passenger automobiles (other than trucks or vans) placed in service during calendar 2016 to which 50% bonus depreciation applies.However,The IRS considers any auto with an unloaded gross weight of 6K pounds or less a luxury vehicle. It gives you two ways to depreciate a luxury auto used for business purposes. You can take an additional bonus depreciation amount the first year you put the auto in service or opt out of taking the additional depreciation. In that case, your depreciation deduction is limited to $3,160 in the first year, $5,100 in the second year, $3,050 in the third year and $1,875 for the remaining years. If you want a larger deduction, you can take the additional bonus depreciation.I mean your depreciation deduction is limited to the lesser of the MACRS depreciation amount or the amount stated under Procedure 2016. Under Procedure 2016, the maximum bonus depreciation deduction you can take for the first year is $11,160. say, you purchase a $50K luxury vehicle used 100 percent for business purposes. You place the auto in service in the first quarter of the year. Under MACRS, your first year?s depreciation deduction is 35 percent of the auto?s cost, which is $17,500. However, under Revenue Procedure 2016, you can only take a maximum depreciation of $11,160.


And if you are willing, please tell me exactly what should go in each box underneath this. ====>When you use tax return software to prepare your business tax return, they do the math for you. All you do is answer a few simple questions about each asset.



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