IRS audit results, need advice.

Did you get rid of the truck, or do you still have it? This has nothing to do with your authority. If you no longer have the truck, this is correct.

 

It is just if you rent a house. You claim depreciation while renting it, but when you sell it you now owe taxes for the depreciation you took over that period of time.

 

Assuming you bought this truck in October or November of 2011 you would have been entitled to very little depreciation based on how late in the year that you purchased it. Did you take a full years' worth of depreciation or just the months you were entitled to? Did you use Straight Line or Modified Accelerated version? Yes, it sounds right unfortunately - what kind of numbers are we talking?

 

So, have you contacted the CPA on this?

That should be the first place to look.

 

Sounds to me like they used Section 179 deduction for the entire write off in the beginning year. Not a very good choice on a new start up with no history.

This deduction has a huge recapture when the item ceases to be used in a business before the life of the asset ends. In this case 3 years.

Could be an interesting problem, since you owned the truck and the authority. Then cancel the authority and then you are not engaged in a business. If you had been leased to someone you could have been saved.