Tax Guru – Ker$tetter Letter

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Sec 179 Locks In Actual Expense Method

Posted by taxguru on February 24, 2006


Subject: question
If I take the section 179 deduction of $25,000 on my new truck for 2005 can I take mileage in 2006?



No, and here is why.

The IRS standard mileage rate includes a portion for straight line depreciation (17 cents per mile for 2005 & 2006).  If you use the actual expense method of deducting vehicle costs, and use the straight line depreciation method, you are allowed to switch to the standard mileage rate in subsequent years for that particular vehicle.

However, if you use any accelerated depreciation method, of which Section 179 is the most accelerated, you must stick with the actual expense method for as long as you have that vehicle.  To allow you switch to the standard mileage rate would in effect be allowing you to over-depreciate the cost of the vehicle.

I hope this helps.  Your personal professional tax advisor can give you more specific figures for your particular situation.

Kerry Kerstetter


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