Tax Guru – Ker$tetter Letter

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Archive for the ‘Vehicles’ Category

Per Mile Tax

Posted by taxguru on May 20, 2015

For several years now, various governmental entities have been threatening to start levying a per mile tax on vehicles because they aren’t satisfied with what they are already taking in at the fuel pumps and toll collectors.

It looks like,Oregon is going to start that process, which will most likely spread across the county. Of course, as is always the case, this will end being an additional tax and not just a replacement for an existing one.

Oregon to test pay-per-mile idea as replacement for gas tax

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This issue reminds me of the following verse from George Harrison’s classic TaxMan song.

If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet

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Posted in NewTaxLaws, TaxMan, Vehicles | Comments Off on Per Mile Tax

2015 IRS Mileage Rates

Posted by taxguru on December 11, 2014

IRS has released the standard mileage rates for 2015.  This is handy to know ahead of next year because many employers use these rates for reimbursing employees for business miles driven on the job.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

  • 57.5 cents per mile for business miles driven, up from 56 cents in 2014
  • 23 cents per mile driven for medical or moving purposes, down half a cent from 2014  
  • 14 cents per mile driven in service of charitable organizations

 

If oil prices continue to drop, there is a good chance that IRS will lower the standard rate for business miles at some point during 2015, giving us another year with multiple rates for different parts of the year.

 

Posted in IRS, Vehicles | Comments Off on 2015 IRS Mileage Rates

2014 IRS Standard Mileage Rates

Posted by taxguru on December 6, 2013

IRS has released their standard mileage rates for 2014 in plenty of time for those who use them as a guide for employee reimbursements to make the appropriate adjustments.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

 

Posted in Deductions, IRS, Vehicles | Comments Off on 2014 IRS Standard Mileage Rates

2013 IRS Mileage Rates

Posted by taxguru on November 21, 2012

IRS has announced that, beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56.5 cents per mile for business miles driven
  • 24 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

 

Posted in Deductions, IRS, Vehicles | Comments Off on 2013 IRS Mileage Rates

2012 Vehicle Depreciation Amounts

Posted by taxguru on March 7, 2012

Each year, IRS issues the amounts that can be claimed as depreciation for vehicles placed into service that year, over their useful lives.  As has been the case since these Luxury Vehicle rules were implemented in 1984, they do not apply to vehicles weighing more than 6,000 pounds GVW.

Revenue Procedure 2012–23 (courtesy of CCH) has the following amounts for business vehicles placed into service during 2012. 

Passenger Automobiles:
Year 1 –  $3,160 ($11,160 if bonus depreciation applies)
Year 2 –  $5,100
Year 3 –  $3,050
Year 4 and on – $1,875 per year 

Trucks and Vans:
Year 1 –  $3,360 ($11,360 if bonus depreciation applies)
Year 2 –  $5,300
Year 3 –  $3,150
Year 4 and on – $1,875 per year

 

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Posted in 4562, Vehicles | Comments Off on 2012 Vehicle Depreciation Amounts

Recapturing Depreciation

Posted by taxguru on February 27, 2012

 

Q:

Subject: Section 179 deduction question

Hi Kerry, I hope you’re doing well today. I came across one of your tax guru web pages (http://www.taxguru.org/incometax/Rates/Sec179.htm) as I was seeking some tax advice. Thank you in advance for providing the information. I do have a question and wondering if you wouldn’t mind assisting me as it pertains to section 179.

I had purchased and placed in service a 2010 Cadillac Escalade (shorter model) on Sept. 9, 2010 as I am a self-employed individual and had utilized the vehicle for my consulting business (sole proprietor) the day of inception thru the remainder of year 2010 and all of year 2011. I had taken the section 179 deduction for tax year 2010 of $25,000 plus the allowable bonus depreciation of $11,855 for a total of $36,855 deprecation deduction in tax year 2010.

At this time, I hit extremely difficult income times as my income has decreased over 70% starting from the beginning of October 2011 to present as my consulting contracts have just about dried up and now I have to look at getting rid of assets. Unfortunately, I can’t afford the Escalade at this time and need to dispose of it immediately. If I were to sell it outright today and not trade it for any like-kind exchange, what tax implications would I be looking at for tax year 2012 meaning, what estimated tax do you think I would have to pay in the disposition of the Escalade? Additional information is I claimed the 5 year recovery period using the 200 DB-HY method/conversion and entered the cost basis of the esclade as $61,855 (that’s what I paid for it).

I’m only asking for an estimate, if you can provide one, and thank you very, very much in advance, if you’re able to provide an answer. I really appreciate it.

best regards,

 

A:

Calculating the taxable gain is pretty straight forward.

Add up all of the Section 179 and depreciation deductions you have claimed for the vehicle and then subtract that from your original purchase price. That will give you the adjusted cost basis (aka Book Value) of your vehicle. Anything above that amount that you sell it for will be your gain.

This gain, which is technically depreciation recapture, will be taxed as ordinary income on your 1040. The actual rate you will be paying for it will depend on your other income and deductions and what tax bracket you are in.

A professional tax advisor can work with your specific numbers to get you a more precise estimation of the tax effect of the sale. Another way to do this, if you are taking the risky approach of preparing your own tax returns, is to use whatever software you have for the 2011 returns and prepare a proforma 2012 with the sale of your Escalade and your other estimated 2012 figures.

You didn’t say whether you paid cash for the Escalade or financed it. The gain calculation is the same either way. However, you need to remember that the debt relief from the pay-off or assumption of any loan you may still have on the vehicle is considered to be the same as receiving cash by IRS. The total sale price will be the loan balance paid off plus any cash you receive.

Good luck. I hope this helps.

Kerry Kerstetter

 

 

Posted in 179, 4562, Vehicles | Comments Off on Recapturing Depreciation

2012 IRS Mileage Rates

Posted by taxguru on December 9, 2011

IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 55.5 cents per mile for business miles driven
  • 23 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

 

Posted in Deductions, IRS, Vehicles | Comments Off on 2012 IRS Mileage Rates

2010 Vehicle Depreciation Limits

Posted by taxguru on November 19, 2009

CCH has calculated the inflation adjustments for the depreciation limits on business vehicles first placed into service in 2010.  Based on past experience, they expect IRS to release their official version of the calculation in April 2010.

Ever since the ridiculously low luxury car limits on depreciation were initiated in 1984, we have had to break the news to clients that they were driving luxury cars in the eyes of the IRS, even though that wasn’t reflected in reality.

The new limits per CCH:

Passenger Vehicles:

Year 1                            $3,060
Year 2                              4,900
Year 3                              2,950
Year 4                              1,775
Year 5                              1,775
    Five Year Total         $14,460

Trucks & Vans:

Year 1                       $3,160
Year 2                         5,100
Year 3                         3,050
Year 4                         1,875
Year 5                         1,875
    Five Year Total    $15,060

 

Posted in 4562, Vehicles | Comments Off on 2010 Vehicle Depreciation Limits

Sec. 179 For Yachts?

Posted by taxguru on November 10, 2009

Another question that really depends on multiple factors.

YouTube page.

 

 

Business Plan Pro 

 

Posted in 179, Vehicles, video | Comments Off on Sec. 179 For Yachts?

Maximum Sec. 179 For Vehicles – VidCast

Posted by taxguru on November 8, 2009

It’s not a cut and dried answer as to the maximum that can be claimed, as I explain in this vidcast Q&A.

If the embedded player doesn’t work, you can access the video directly on YouTube.

 

 

TaxCoach Software: Finally! Plain-English Tax Planning That Builds Your Business!

 

Posted in 179, Vehicles, video | Comments Off on Maximum Sec. 179 For Vehicles – VidCast

 
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