Can I write off a vehicle for the whole tax year?

Question

Last year I started a business and am self employed.

If I buy another vehicle, which would be used as 100%

business. Can I deduct this vehicle for the whole tax year

of 2008? Say the vehicle costs $15,000. Even though I

buy the vehicle in August 2008, can I depreciate it for

$5000?

Answer 1

Vehicles (such as cars) are depreciated over six years.  There are maximum amounts allowable, but they don't apply for such an inexpensive vehicle.  

In the case of a car with a depreciable basis (cost with no trade-in) of $15,000, purchased in August of 2008, you would in most cases be able to depreciate:

2008: $3,000

2009: $4,800

2010: $2,880

2011: $1,728

2012: $1,728

2013: $864

A complete discussion of actual expenses which can be deducted for business vehicles is cited below.

Answer 2

You can depreciate it for the time you used it for business but not a whole year.  You can also take the IRS standard mileage rate of 50.5 cents per mile if the serves you better.  You may be able to take the whole cost (minus trade in value) in one year under IRS Code Section 179 but won't have any depreciation to use next year when, hopefully, the business becomes more profitable.

Answer 3

You need to depreciate the expense. You can check into rules for section 179 but it may not qualify. If there is any chance you may turn it into personal use prior to the useful life expiring then do not depreciate it.

Answer 4

If you use a vehicle 100% for business, then you can depreciate it.  However, $5000 would be too much even if it were a 3-year item.  Autos, although 3 years would be reasonable on an accounting basis, are specified as 5-year propertly with a separate limit on the maximum deduction in each year.

Furthermore, if you use the mid-year convention, then your first year depreciation would be approximately 20% of the value.  If over 60% of your business's depreciable assets were acquired in the latter half of the year, you're subject to the mid-quarter convention, and your first year depreciation would be approximately 15% of the value.