Depreciate a used truck and new motor package ?

Yes. You can depreciate $25,000 under the section 179 deduction (and they have always increased this limit before tax time in the last 15 years or so). So that takes care of the purchase. The overhaul is a "repair", so it is an expense, not a capital purchase.

Just take care to get two separate invoices, with two separate dates, just to CYA. Two different vendors would even be better.

 

Actually the $25,000 repair would need to be shown as a capital asset at first rather than being included in your profit and loss statement as an expense. They changed the law last year and any major repair that extends the life of the truck (i.e. engine, transmission, rear-ends, paint job, etc.) has to be capitalized as an asset and amortized over the useful life from the repair, rather than shown as an expense. Then you could put it on your form for Section 179 Depreciation in that same year if that was what you wanted to do and write it all off. It all works out the same, but this way will keep your return correct by writing the repair off as depreciation rather than the repair. I think the limit for the 179 last year was like $500,000 as it is subject to change every year.

 

This is not 100% correct. If it is within 3 years of the purchase of the equipment you can deduct it as an expense, if it is outside of 3 years, and is not considered normal maintenance it must be depreciated. That was the law as of this past April when I had my taxes done.

 

Guess my tax adviser was wrong then. He advertises nationally to be a trucking tax expert.

 

EVERY tax preparer is wrong. There is no way a person will hit 1,000 on tax rules. Too many of them, and they change them all the time. Get your taxes done by two guys, both qualified, and the results will be different, every time. The code needs gutted and overhauled.