TAXMAN Posted December 16, 2015 Report Share Posted December 16, 2015 I need a clarification. TP bought truck from leasing co when lease ran out about 20k about 6 years ago. TP did use in business of trucking. TP never put on depreciation and now sold truck. Truck is one of those tractor trailer trucks.(5 year life for depreciation) Is it possible to pu all that depreciation in 1 year on sch C. Then sell the truck on 4797? Would I have to file the 3115 form as well? Quote Link to comment Share on other sites More sharing options...
BHoffman Posted December 16, 2015 Report Share Posted December 16, 2015 Wondering if the TP treated it like an operating lease and just deducted the lease payments? 1 Quote Link to comment Share on other sites More sharing options...
easytax Posted December 16, 2015 Report Share Posted December 16, 2015 6 minutes ago, TAXMAN said: I need a clarification. TP bought truck from leasing co when lease ran out about 20k about 6 years ago. TP did use in business of trucking. TP never put on depreciation and now sold truck. Truck is one of those tractor trailer trucks.(5 year life for depreciation) Is it possible to pu all that depreciation in 1 year on sch C. Then sell the truck on 4797? Would I have to file the 3115 form as well? Brain dead right now, so no cite BUT --- just because you do not use it it year -- you should have --- does NOT make it allowable to use it when you want. Not allowed. Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted December 16, 2015 Author Report Share Posted December 16, 2015 In looking at old returns tp deducted lease payments(4 years) then bought truck when lease ran out at market value. It seems strange to put income on due to sale of truck because tp did not depreciate truck after purchasing it. Quote Link to comment Share on other sites More sharing options...
rfassett Posted December 16, 2015 Report Share Posted December 16, 2015 Them's the rules. Depreciation is taken or assumed taken when it is suppose to be taken. Your over the road truck has a three year depreciable life. If he placed it in service six years ago, you are out of luck. His basis is zero. Hopefully this was not your client six years ago and this can be a teaching moment for you. And you can show him how tax smart you are. Of course, none of that will lessen the sting. But at least he will respect you. 4 Quote Link to comment Share on other sites More sharing options...
joanmcq Posted December 17, 2015 Report Share Posted December 17, 2015 use Form 3115 to treat as a change in accounting method ( improper depreciation method). Then and only then you can take all of the depreciation in the year of sale. FYI, the depreciation life for a tractor (trailer) is 3 years, not 5. 6 Quote Link to comment Share on other sites More sharing options...
TAXMAN Posted December 17, 2015 Author Report Share Posted December 17, 2015 Many thanks to all. I knew life was 3 not five after I had posted. Fingers got happy. 1 Quote Link to comment Share on other sites More sharing options...
SaraEA Posted December 18, 2015 Report Share Posted December 18, 2015 Did your client use standard mileage rate for those years? Unlikely, but if he did depreciation is figured in the standard rate. Check with irs.gov to see how much depreciation was included each year. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted December 19, 2015 Report Share Posted December 19, 2015 You can't take SMR with a big rig. 3 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.