Discussion:1 Vehicle; 2 Business Activities-Prior preparer listed vehicle on depreciation sch.
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Discussion Forum Index --> Advanced Tax Questions --> 1 Vehicle; 2 Business Activities-Prior preparer listed vehicle on depreciation sch.
Discussion Forum Index --> Tax Questions --> 1 Vehicle; 2 Business Activities-Prior preparer listed vehicle on depreciation sch.
| 15 April 2008 | |
| I have a client whose prior preparer listed a truck on the depreciation schedule, using a straight line method. The client was using the truck as an employee and occasionally had unreimbursed business mileage. During the year, while working as an employee the client had all of his mileage reimbursed, then during the year, the client left his job as an employee and began working as an independent contractor, using the same vehicle. My question is this. Since the vehicle is set up as an asset carrying over to form 2106, how would I capture the business mileage that the client drove while he was using the vehicle for his Schedule C business? | |
| 15 April 2008 | |
| If they were reimbursed deduct that from the actuals on the 2106. Take the remaining basis and put the vehicle in service on the appropriate date on the Schedule C. | |
| 15 April 2008 | |
| This gets messy because the client started his Sch. C business, used the truck for 2-3 months, then traded it in for another truck (all in 2007). | |
| 15 April 2008 | |
| I've already got the new truck added to the schedule, added the basis from the old truck (that was traded in) to the actual cash paid for the new truck. It's a matter of capturing the business mileage he had on the old truck for 2-3 months while he was self-employed. | |
| 15 April 2008 | |
| Dispose of the old truck on the schedule C and list the new truck when purchased. | |
| 15 April 2008 | |
| Since there would be a gain on disposition of the old truck and more importantly since it was an actual trade-in with no cash taken by the taxpayer, the new truck has to be placed on the schedule with the basis of the old truck and the cash actually paid for the new truck.
Add the old truck to the depreciation schedule a second time (midway through the year as of when the Sch. C began) with the remaining basis of the old truck? Then add the basis of the old truck at the date of the trade-in to the cash paid for the basis of the new truck? I'm thinking I'd want to elect out of the 1.168 regs so that I could remove the old truck (especially if listed twice) from the depreciation schedule. If not, that could appear to be very confusing for anyone. | |
| 15 April 2008 | |
| Would it be incorrect to show the old truck a second time on the depreciation schedule (this time going to the Sch. C where the taxpayer used it), then showing the trade-in and bringing the new truck on the schedule with the cash paid and the old truck's remaining basis? | |
