With tax season around the corner, my dad currently has a Honda odyssey and is looking to downsize to a small’ish 7 passenger suv (Genesis gv80). Let’s say he uses it 60% of the time for business so he can write of 60% of purchase price under the bonus depreciation program (so total cost is $70,000 minus 60% =$42,000 write off), after keeping it for 3 years and resells it for let’s say 55% of original msrp ($38,500), what is this sale considered as, since 40% (28,000) was never written off, is only the extra 10k considered business income and taxed at your business rate or is it long term capital gains taxed at only 15%? or is the whole 38 considered income?
As awesome as this forum is. For tax related stuff I would usually suggest speaking to your own legal tax professional.
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Agreed. The IRS publications explain the “what if”, your CPA can explain what and how it specifically applies to you.
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are you sure that’s a 6k GVVW car? Seeing it as sub 6k…
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My understanding is that he would recapture 60% of the selling price since he wrote off 60% of the purchase price, although I am not a tax expert.
Yes the 3.5 engine models are slightly over
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It may not have been written off, but it was fully depreciated.
What do you mean by that, written off= depreciation
No. The vehicle was fully depreciated, but only the business use portion was written off.
Search depreciation recapture & you should have some examples.
Basic idea is you calculate gain or loss on the transaction & if there is a gain, then the portion of the gain attributable to the depreciation expense has to be “recaptured” as ordinary gain instead of capital gain.
Not tax advice and consult your cpa
When you sell the suv, the sale price is the recapture and considered ordinary business income
There is not capital gains/loss with section 179