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- Is depreciation allowed for a auto with reduce business usage on a sched c?
Is depreciation allowed for a auto with reduce business usage on a sched c?
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usercarlos
Level 1
07-19-2021
01:31 PM
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I have a client who had a auto vehicle that was used at a higher rate in previous 3
years (95%) and now that in fourth year it is 55% therefore it is not allowing any depreciation. I dont understand the logic and was wondering whether there were exclusions to this rule or is it just oversight by the IRS. To me it doesnt make sense to use current yr at all vs an average rate for instance if someone had used a car 100% business in first 2 yrs and then 40% for 3 years after then they are allowed a zero dep deduction for last 3 years...that seems stupid so my mind it telling me that there has to be more to it.
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1 Comment 1
TaxGuyBill
Level 15
07-19-2021
02:43 PM
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It has to with the fact that Intuit software (you didn't say which software you are using) usually uses the Mathematical method of depreciation, rather than using the depreciation "Tables".
And using the order of operations of math that the program uses, the math does work out correctly so that a shift in business percentage does do such things like that. But whether or not Intuit is using the correct order of operations for the math is questionable (but it has done it this way for 20+ years, including TurboTax, and TaxAct also does it, so apparently the IRS hasn't argued against it).
