Expensing major repairs on tax return???

Discussion in 'Trucker Taxes and Truck Financing' started by tompetty69, Feb 19, 2018.

  1. tompetty69

    tompetty69 Light Load Member

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    I have a question on how to treat expenses that extend the life of the truck like engine, transmission and third member rebuilds on the tax return. A couple of years ago, I heard those type of expenses needed to be amortized through depreciation as opposed to writing them all off in the year of expense. Does anyone know what the proper treatment of these expenses are? I have done it both ways, but would like to know what the IRS wants.
     
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  3. strollinruss

    strollinruss Road Train Member

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    My guy writes all maintenance and repairs off immediately. Only new truck purchases are depreciated out. I guspess if you had too many write offs you could
     
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  4. Bakerman

    Bakerman Road Train Member

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    Same here.
     
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  5. poppapump1332

    poppapump1332 Road Train Member

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    Pretty sure at least engine rebuilds you are suppose to depreciate it instead of all at once but I could be wrong as i'm no accountant.
     
  6. Accidental Trucker

    Accidental Trucker Road Train Member

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    Just put it on a depreciation schedule if in doubt. Then take it all the same year under section 179. With the new, higher, limits you will never have to take less in depreciation than you want to.

    If you get audited and they don't like you expensing something, they'll amend the return and create significant interest and penalties. At that point you can't amend it to take it under 179. So, when in doubt, create an asset and take it under 179.
     
  7. Travelling Accountant

    Travelling Accountant Bobtail Member

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    This driver knows business.
     
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  8. tompetty69

    tompetty69 Light Load Member

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    That's what I did two years ago just to be on the safe side. Thanks for the reply.
     
  9. mtoo

    mtoo Road Train Member

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    That's how I always did it. Sec 179 is a great friend.
     
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  10. Aces-N-Eights

    Aces-N-Eights Light Load Member

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    YES, any major item like those you listed should be added to a depreciation schedule as an asset. This allows you some wiggle-room to play with Sec 179 (bonus) depreciation if you NEED the benefit for the year of purchase. I also never do amortized depreciation on anything. EVERYTHING pretty much has a finite life-span, so I would recommend using STRAIGHT-LINE for items. If you sell or transfer the asset while amortized, you may wind up in a situation where you have to recapture some of the depreciation at the time of disposition.

    One item that is often overlooked when it comes to depreciating assets is TIRES.

    Bottom line is this: Find a tax professional in your area that has specifically worked with trucking company tax returns before, and verify any information you receive that is not from a professional. Taking "parking lot tax advice" is a sure-fire way to wind up with your butt in a sling!!
     
  11. mtoo

    mtoo Road Train Member

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    Tires, lets talk tires. They have a life over a year.
     
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