blue73thing wrote:

- quote -

Whatever the period would be if you had not elected IRC 179
expensing is the period you have to watch out for recapture.

The IRS has tables in their depreciation publication that
indicates the class life for various things.

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- quote -

For the medium duty truck (assuming it is not used for any
personal use) it is 5 years, same for the mower.

The 3 year class life applies to over the road vehicles
(semi tractors)

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blue73thing <blue73thing[at]triad.rr.nospam.com> wrote:

- quote -

There's a list of much depreciable property in IRS
Publication 946, and for the most part, if it isn't on the
list or cannot be subsumed by a list item, then use 7 years.

As for when you no longer claim depreciation, that's when
the cost basis has been reduced to zero,

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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I guess my question was, for a medium-duty truck - 16,000 lb
GVWR - what is the depreciation life? Same for a commercial
mower, what is its depreciation before it's considered
unnecessary to recapture any depreciation. For some things
it's 5 years, for some it's 3. How do I know which is
which?

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Paul A Thomas wrote:
- quote -

Just a stray thought here, but I've seen a tax return which
did not recapture the excess 179, since the preparer
"figured" business use stopped on Dec 31st (rather last day
of fiscal year), even though the asset ceased being used
earlier in the year, and therefore before the required (in
this case) three years was up.

ChEAr$,
Harlan Lunsford, EA n LA
Wed, 24 Nov 2004 16:13:14

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blue73thing <blue73thing[at]triad.rr.nospam.com> wrote:

- quote -

Once you take advantage of Sec 179 for depreciable property,
you need to keep track of business use of that property
until the depreciation period has ended. If busines use
drops below 50% during that period, you might have to
include some of that Sec 179 expense as taxable income.

And when you sell depreciated business property, your cost
basis for that sale is the depreciated value. If it cost
$30,000 new and after 3 years has its cost basis reduced to
$5000, then use 5000 as cost for that sale.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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blue73thing wrote:

- quote -

Since you said nothing about the duration of the business,
and assuming the business continues, then the proceeds of
the sale of these assets are fully taxable.

Different ballgame though if you take the deduction for
these and the next year you cease business operations. In
which case I would recommend local competent tax pro help
(either a CPA or EA)

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

If you claim a section 179 deduction for the cost of
property in the year you place the property in service, and
in a subsequent year, you do not use it more than 50 percent
for business, you may have to recapture part of the section
179 deduction. This can occur in any year during the
recovery period for the property even though the items have
not been sold. Refer to Publication 946, How to Depreciate
Property, on how to calculate the recapture amount. The
recapture amount is computed on part IV of Form 4797 (PDF),
Sale of Business Property, and is included as other income
on line 6 of Form 1040, Schedule C (PDF), Profit or Loss
from Business (Sole Proprietorship).

Forms and publications may be viewed, or downloaded,
from http://www.irs.gov

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"blue73thing" <blue73thing[at]triad.rr.nospam.com> wrote

- quote -

Hopefully they are used in the business. Buying something
~just~ for the tax benefit isn't the best use of your cash.

But, if for some reason the asset stops being used more than
50% for business, the accelerated depreciation taken under
Section 179 is recaptured. The amount that gets recaptured
depends on how long after the asset is "section 179'd"
before it isn't used in the business. More specifically, the
amount of recapture is the difference between Section 179
taken and what regular depreciation would have yielded.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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What happens to assets, like a big truck and commercial lawn
mower after one depreciates the at 100% in the first year,
and maybe the bonus depreciation too. How long must you
keep these assets and once they're no longer useful, what do
you do with any proceeds from these assets that have been
fully depreciated? Thanks for the help.

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