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@dsacpa wrote:
The idea of having excess deductions each year not available until year 7 doesn't make sense to me.
I agree it doesn't make sense, but that is what the crazy people in Congress wrote.
§280F(a)(1)(B):
(B) Disallowed deductions allowed for years after recovery period
Except as provided in clause (ii), the unrecovered basis of any passenger automobile shall be treated as an expense for the 1st taxable year after the recovery period. Any excess of the unrecovered basis over the limitation of clause (ii) shall be treated as an expense in the succeeding taxable year.
When they came out with 100% Bonus depreciation, the IRS created as special rule/procedure because otherwise NO depreciation would be allowed from years 2 through 6. Below is a link to that, and I copy-and-pasted a couple of sentences below to show how bizarre it would be if they did not create that special rule. While you aren't dealing with 100% bonus, the 50% bonus can create some weirdness (and it doesn't fall under this special IRS rule for 100% bonus).
https://www.irs.gov/pub/irs-drop/rp-19-13.pdf
if a calendar-year taxpayer places in service in December 2018 a passenger automobile that costs $50,000 and is qualified property for which the 100-percent additional first year depreciation deduction is allowable, the 100-percent additional first year depreciation deduction and any § 179 deduction for this property is limited to $18,000 under § 280F(a)(1)(A)(i) (see Table 2 of Rev. Proc. 2018-25) and the excess amount of $32,000 is recovered by the taxpayer beginning in 2024, subject to the annual limitation of $5,760 under § 280F(a)(1)(B)(ii)
