Depreciating a new truck

Are you planning to trade it in on a new one in 5 years?

 

You depreciate the whole thing and adjust when you sell it. you keep it for 7 years sell for 20k. The 20k is positive revenue. Since the 150 has been deducted from taxes previously.

 

I'm by far no expert not even a novice.
But if he trades it trade in price is deducted from price of new one. If sold out right then he pays capital gains on sale price. Assuming he writes it all off in 3 or 5.

 

Talk to your accountant, that's how ...

 

Depends, you going to keep it till you retire or trade it in in a few years? If you're going to sell it in 5 years and retire you depreciate 100k or so over 5 years, if you're going to keep it till it goes to a scrapyard and you get pennies on the dollar depreciate it all the way to zero.

 

I'm thinking the new tax changes make you depreciate 100% when you buy it.

 

It was flexible to a point for me. I did 7.5k first year the 27.5 the next two years.

 

As was already mentioned, talk to your accountant.
If you don't have one, look up the depreciation guidelines for wherever you live. Here in Canada, Revenue Canada tells me what to use as a depreciation rate, I don't get to choose myself.

 

You depreciate it all the way to zero over 5 years, not 3. So you do get your entire investment in the truck, since its used 100% for business, written off, leaving a bases of zero "0" on your balance sheet for the truck. At some point, if you trade it in and get a new or newer truck, you add the net new cost of the new truck to the account, that you used for the truck you wrote down. So, lets say you write down your truck for 4 years using your example. At 30000 per year (sales tax needs to be capitalized in to the basis cost as well), at the end of year 4, you have depreciated 4 x 30k = 120k. Your basis is at 30k, assuming a fresh start when you bought this truck. Suppose after the 4th year you trade in your truck and they give you 50k off the price of a 185k truck. You would add $135k to your existing basis of 30k, making the new basis = $165k and a new start to the 5 year depreciation.

I'm not an accountant by trade, nor a trucker yet. However, I do consult CPAs on quetions such as this and have done my own depreciation of my warehouse / company vehicles and corporate as well as personal taxes for quite a few years. This stuff, I learned last year when I was contemplating a lower trade in than what I could get in the open market. It turned out, I did better by tradig my car in for about 20% less than I could sell it for, because of accounting principles. I hope this helps. Read up on this on the internet and there are some good articles by qualified cpas.