Truck Depreciation

[vontrial]

I have a 2000 model truck paid 24,500 for it in 2006 10% dwn finance for 2 yrs, last payment in April 2008. Question,I filed for extension for 2006 taxes now will see CPA on Monday,what will be avg deprecition on truck and how long will it be before truck depreciate completly.

Thanks in Advance

[GMAN]

I believe it is 3 years for a truck of that age. The depreciation has nothing to do with how much you paid for it, only the total purchase price. I believe it is form 4562. I prefer the straight line depreciation.

[no_worries]

You can depreciate a highway tractor out as long as you like. The minimum depreciation period is 3 years. Straight-line using the half-year convention is the simplest method. Divide the purchase price by 3 to get your annual depreciation. In 2006 you get a half-year's depreciation. 2007 and 2008 you get a full year's worth and 2009 you get the final half-year.

[allan5oh]

That's a better system then what we have here.

20% first year, 40% each year after that.

So your 5th and final year of truck payments, the payments are the same yet your tax bill has gone up significantly.

Also you can never fully writeoff the truck, but it's a moot point when your remaining base cost is around $1000 or less.

If you can do it, I'd really recommend to match the depreciation with the payments.

[countryhorseman]

You can depreciate a highway tractor out as long as you like. The minimum depreciation period is 3 years. Straight-line using the half-year convention is the simplest method. Divide the purchase price by 3 to get your annual depreciation. In 2006 you get a half-year's depreciation. 2007 and 2008 you get a full year's worth and 2009 you get the final half-year.

This is incorrect! Gman is correct! A highway tractor can only be depreciated for a period of 3 years. The first year, you can, but not normally recommended, take the depreciation of the entire purchase price, if you have adequate tax deficit to justify this.

For accurate and authoritative advice for truck drivers, go to the following websites: http://www.attrucktax.com/ or http://masterthejourney.terapad.com/

Also, if you have XM Radio - check out Kevin Rutherfords show on XM 171, info below, XM Radio is 100% deductible on your taxes.

ATBS Trucking Business and Beyond with Kevin Rutherford
New time begins Mon, 10/8 | Daily | Midnight-1AM ET
Weekends | 4-7PM ET

Here's the number to call the studio during the show 303-302-1234

Call in with questions (303-302-1234) for our industry expert guests who can help both owner-operators and company drivers improve their bottom line.

This is going to probably be your best source for trucking tax and business information.

[ncnewbie]

Yep, Form 4562 I believe. From IRS Pub 946, P.31

"The Modified Accelerated Cost Recovery System Placed in service
(MACRS) is used to recover the basis of most business Property class
and investment property placed in service after 1986."

P.33, "The following is a list of the nine property classifications under GDS (General Depreciation Schedule) and examples of the types of property included in each class..........

1. 3-year property
a. Tractor units for over-the-road use"

It works out to be 4 tax years in most cases, a little being left til the 4th year.

Your question of "how much" depends on whether you choose the Declining Balance (bigger deductions in early years) or Straight Line method (more equal deductions) AND what month the tractor was "placed in service". Generally, if placed in service early in the year, you'' get a larger percentage deduction the first year. Late in the year, larger percentage next year. Your CPA should be able to explain the details if you're interested.

[GMAN]

I believe it is 3 years for a truck of that age. The depreciation has nothing to do with how much you paid down, only the total purchase price. I believe it is form 4562. I prefer the straight line depreciation.

[vontrial]

Like to say Thanks to everyone now I have a better understandind when I see my CPA.

[GMAN]

It is always a good idea to consult with your accountant.

[Hiway61]

So after the truck is totally depreicated, and one sells it, does that money become capital gains or ordinary income? :?:
TIA

[solo379]

Capital gains.