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Gerri A Harrison CFP EA
Gerri A Harrison CFP EA, Enrolled Agent
Category: Tax
Satisfied Customers: 252
Experience:  27 years of preparing income tax returns - both personal and small business
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I need to caculate depreciation on our semi-truck. I had a

Resolved Question:

I need to caculate depreciation on our semi-truck. I had a CPA do the taxes last year. Do I use the same numbers or does the value of the truck change each year?
Submitted: 4 years ago.
Category: Tax
Expert:  Gerri A Harrison CFP EA replied 4 years ago.

No the amount would vary from year to year. If you are able to use the half year convention the percentages are 33.33%, 44.45%, 14.81% and 7.41% since the semi would be a three year asset.

 

The determination of being a half year convention versus a mid-quarter convention is based on when the vehicle was placed in service. If more than 40% of the cost of assets placed into service during that year it would force the mid-quarter convention versus the half-year.

 

You could take the cost, multiply by the 33.33% to see if that was the amount claimed on the first year. If it was, then you know he used the half year convention. If it is a different amount then it may be the depreciation was calculated on a mid quarter convention.

 

You might find Pub 946 at irs.gov helpful, it leads you through how to claim a depreciation deduction.

 

Hope this helps. If you still have a particular question please hit the need info and ask. If you are satisfied with the answer, please hit the green accept button and close out the question to allow me to receive payment.

Customer: replied 4 years ago.

My tax person did it incorrect. He used a recovery period of 7 yrs.

 

His numbers were

Total cost $132301

-$17450

Deduction of $4100

 

I already amended the taxes for he forgot to use this deduction.

 

Could you tell me how I can do this?

Expert:  Gerri A Harrison CFP EA replied 4 years ago.

If you are able to use the half-year convention, you take the total cost times the percentage for that year. So if you are in the second year take $132301 times the 44.45% and that is the amount of depreciation to claim this year. That would be $58807.

 

The only thing is whether or not he took bonus depreciation which would reduce the total cost down. Is that possibly what the $17450 is?

Customer: replied 4 years ago.

The $17450 is on line 12. It was minus $132.301 which then is $114,851 (c) basis for depr. and he put 7 yr recovery period on (d). Which I know it should be 3 yrs like you told me. (e) conventoin is MQ, (f) Method it 200db and (g) is $4100.

Customer: replied 4 years ago.
I also had to pay in 2008, so if I ammended my taxes once can I do it again?
Customer: replied 4 years ago.

Okay, just called the IRS. I will be ammending my 2008.

 

If I use the amount of the semi of $132301 in line 2 for 2008 is the same every year?

 

How do I figure out 19a every year?

Expert:  Gerri A Harrison CFP EA replied 4 years ago.

So the amount would be the $114851 if bonus was taken times the appropriate percentage. For mid quarter convention it matters which quarter you purchased the asset to determine the % to multiply by.

 

if purchased in 1st quarter % are - 58.33, 27.78, 12.35 and 1.54

if purchased in 2nd quarter % are - 41.67, 38.89, 14.14 and 5.30

if purchased in 3rd quarter % are - 25, 50, 16.67 and 8.33

if purchased in 4th quarter % are 8.33, 61.11, 20.37 and 10.19

 

There is a partial fourth year due to the assets being purchased in a particular quarter.

Customer: replied 4 years ago.

Sorry, I have been busy.

I am not understanding any of this yet.

All I really need to know is the numbers for depreciation

 

Bought the truck on 10/01/2008 amount $132301, what can I put in elected cost, basisi for depreciation and depreciation deduction for 2008 taxes?

 

Also balance owed 2009 is $110049. Do I still use $132301 for cost? Do I put in elected cost again and if so for how much? Plus the amount for basis for depreciation and depreciation deduction amount for 2009?

 

Hope you can help. I don't understand the numbers I can use above.

Expert:  Gerri A Harrison CFP EA replied 4 years ago.

The basis does not change. So whatever was used in the first year continues to be used each year.

 

With a purchase price of $132301 in the 4th quarter for the second year depreciation you would use 61.11%.

 

So your depreciation is 132301 x 61.11% for $80849. for 2009

 

What you owe has no bearing on the depreciation. What you have taken in depreciation previously does not effect the current year's depreciation except you need to make sure that you do not depreciate more than the cost over the four years.

 

2008 132301 x 8.33 = $11021

2009 132301 x 61.11 = $ 80849

2010 132301 x 20.37 = $ 26949

2011 132301 x 10.19 = $ 13482

So the total after the 4 years is the full cost of the truck

 

I hope this clarifies depreciation for you.

Gerri A Harrison CFP EA, Enrolled Agent
Category: Tax
Satisfied Customers: 252
Experience: 27 years of preparing income tax returns - both personal and small business
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