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File 2012 Taxes Late Online

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File 2012 Taxes Late Online

File 2012 taxes late online Index A Abandonments, Abandonments Annuities, Insurance Policies and Annuities Asset classification Capital, Capital Assets Noncapital, Noncapital Assets Assistance (see Tax help) Assumption of liabilities, Assumption of liabilities. File 2012 taxes late online , Liabilities. File 2012 taxes late online B Basis Adjusted, Adjusted basis. File 2012 taxes late online Original, Basis. File 2012 taxes late online Bonds, U. File 2012 taxes late online S. File 2012 taxes late online Treasury, U. File 2012 taxes late online S. File 2012 taxes late online Treasury Notes or Bonds Business, sold, Sale of a Business C Canceled Debt, Cancellation of debt. File 2012 taxes late online Lease, Cancellation of a lease. File 2012 taxes late online Real property sale, Canceling a sale of real property. File 2012 taxes late online Capital assets defined, Capital Assets Capital gains and losses Figuring, Long and Short Term Holding period, Holding period. File 2012 taxes late online Long term, Long and Short Term Short term, Long and Short Term Treatment of capital losses, Treatment of Capital Losses Casualties, Section 1231 transactions. File 2012 taxes late online Charitable organization Bargain sale to, Bargain sales to charity. File 2012 taxes late online , Bargain sale to charity. File 2012 taxes late online Gift to, Gift to charitable organization. File 2012 taxes late online Classes of assets, Classes of assets. File 2012 taxes late online Coal, Coal and Iron Ore Coins, Precious Metals and Stones, Stamps, and Coins Comments, Comments and suggestions. File 2012 taxes late online Commodities derivative financial instruments, Commodities derivative financial instrument. File 2012 taxes late online Condemnations, Condemnations, Section 1231 transactions. File 2012 taxes late online Conversion transactions, Conversion Transactions Copyrights, Copyright. File 2012 taxes late online , Copyrights. File 2012 taxes late online Covenant not to compete, Covenant not to compete. File 2012 taxes late online D Debt cancellation, Cancellation of debt. File 2012 taxes late online , Cancellation of debt. File 2012 taxes late online Deferred exchange, Deferred Exchange Depreciable property Real, Depreciable real property. File 2012 taxes late online Records, Depreciation Recapture Section 1245, Section 1245 property defined. File 2012 taxes late online , Like-Kind Exchanges and Involuntary Conversions Section 1250, Section 1250 property defined. File 2012 taxes late online Depreciation recapture Personal property, Section 1245 Property Real property, Section 1250 property defined. File 2012 taxes late online E Easement, Easement. File 2012 taxes late online Exchanges Deferred, Deferred Exchange Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges, Like-Kind Exchanges and Involuntary Conversions Nontaxable, Nontaxable Exchanges Related persons, Related persons. File 2012 taxes late online U. File 2012 taxes late online S. File 2012 taxes late online Treasury notes or bonds, U. File 2012 taxes late online S. File 2012 taxes late online Treasury Notes or Bonds F Fair market value, Fair market value. File 2012 taxes late online Foreclosure, Foreclosures and Repossessions Form 1040 (Sch. File 2012 taxes late online D), Schedule D and Form 8949 1099-A, Forms 1099-A and 1099-C. File 2012 taxes late online , Forms 1099-A and 1099-C. File 2012 taxes late online 1099-B, Form 1099-B. File 2012 taxes late online 1099-C, Forms 1099-A and 1099-C. File 2012 taxes late online , Forms 1099-A and 1099-C. File 2012 taxes late online 1099-S, Form 1099-S. File 2012 taxes late online 4797, Business property. File 2012 taxes late online , Reporting the exchange. File 2012 taxes late online , Form 4797 8594, Reporting requirement. File 2012 taxes late online 8824, Reporting the exchange. File 2012 taxes late online 8949, Forms to file. File 2012 taxes late online , Personal-use property. File 2012 taxes late online , Reporting the exchange. File 2012 taxes late online , More information. File 2012 taxes late online , Timber, Introduction, Form 1099-B. File 2012 taxes late online , Personal-use property. File 2012 taxes late online , Mark-to-market election. File 2012 taxes late online Franchise, Franchise, Trademark, or Trade Name Free tax services, Free help with your tax return. File 2012 taxes late online G Gains and losses Bargain sale, Bargain Sale Business property, Ordinary or Capital Gain or Loss for Business Property Defined, Gain or Loss From Sales and Exchanges Form 4797, Form 4797 Ordinary or capital, Ordinary or Capital Gain or Loss Property changed to business or rental use, Property Changed to Business or Rental Use Property used partly for rental, Property Used Partly for Business or Rental Reporting, Reporting Gains and Losses Gifts of property, Gifts, Gift. File 2012 taxes late online Gold, Precious Metals and Stones, Stamps, and Coins H Hedging transactions, Hedging transaction. File 2012 taxes late online Help (see Tax help) Holding period, Holding period. File 2012 taxes late online Housing, low income, Low-income housing. File 2012 taxes late online , Low-Income Housing With Two or More Elements I Indirect ownership of stock, Ownership of stock or partnership interests. File 2012 taxes late online Information returns, Information Returns Inherited property, Inherited property. File 2012 taxes late online Installment sales, Installment Sales, Installment sale. File 2012 taxes late online Insurance policies, Insurance Policies and Annuities Intangible property, Dispositions of Intangible Property Involuntary conversion Defined, Involuntary Conversions Depreciable property, Like-Kind Exchanges and Involuntary Conversions Iron ore, Coal and Iron Ore L Land Release of restriction, Release of restriction on land. File 2012 taxes late online Subdivision, Subdivision of Land Lease, cancellation of, Cancellation of a lease. File 2012 taxes late online Liabilities, assumption, Liabilities. File 2012 taxes late online Like-kind exchanges Deferred, Deferred Exchange Liabilities, assumed, Assumption of liabilities. File 2012 taxes late online Like-class property, Like-Kind Property Like-kind property, Like-Kind Property Multiple parties, Multiple-party transactions. File 2012 taxes late online Multiple property, Multiple Property Exchanges Partnership interests, Partnership Interests Qualifying property, Qualifying Property Related persons, Like-Kind Exchanges Between Related Persons Low-income housing, Low-income housing. File 2012 taxes late online M Multiple property exchanges, Multiple Property Exchanges N Noncapital assets defined, Noncapital Assets Nontaxable exchanges Like-kind, Like-Kind Exchanges Other nontaxable exchanges, Other Nontaxable Exchanges Partially, Partially Nontaxable Exchanges Property exchanged for stock, Property Exchanged for Stock Notes, U. File 2012 taxes late online S. File 2012 taxes late online Treasury, U. File 2012 taxes late online S. File 2012 taxes late online Treasury Notes or Bonds O Ordinary or capital gain, Ordinary or Capital Gain or Loss P Partially nontaxable exchanges, Partially Nontaxable Exchanges Partnership Controlled, Controlled partnership transaction. File 2012 taxes late online Related persons, Related persons. File 2012 taxes late online , Controlled entity. File 2012 taxes late online Sale or exchange of interest, Partnership Interests, Partnership interests. File 2012 taxes late online , Partnership interests. File 2012 taxes late online Patents, Patents Personal property Depreciable, Like-Kind Exchanges and Involuntary Conversions Gains and losses, Personal-use property. File 2012 taxes late online Transfer at death, Transfers at Death Precious metals and stones, Precious Metals and Stones, Stamps, and Coins Property used partly for business or rental, Property Used Partly for Business or Rental, Part business or rental. File 2012 taxes late online Publications (see Tax help) Publicly traded securities, rollover of gain from, Rollover of Gain From Publicly Traded Securities R Real property Depreciable, Depreciable real property. File 2012 taxes late online Transfer at death, Transfers at Death Related persons, Sales and Exchanges Between Related Persons Condemned property replacement, bought from, Buying replacement property from a related person. File 2012 taxes late online Gain on sale of property, Sales and Exchanges Between Related Persons Like-kind exchanges between, Like-Kind Exchanges Between Related Persons List, Related persons. File 2012 taxes late online Loss on sale of property, Nondeductible Loss Patent transferred to, Related persons. File 2012 taxes late online Replacement property, Replacement property. File 2012 taxes late online , Replacement property to be produced. File 2012 taxes late online Repossession, Foreclosures and Repossessions, Repossession. File 2012 taxes late online Residual method, sale of business, Residual method. File 2012 taxes late online Rollover of gain, Rollover of Gain From Publicly Traded Securities S Sale of a business, Sale of a Business Sales Bargain, charitable organization, Bargain sales to charity. File 2012 taxes late online , Bargain sale to charity. File 2012 taxes late online Installment, Installment Sales, Installment sale. File 2012 taxes late online Property changed to business or rental use, Property Changed to Business or Rental Use Related persons, Sales and Exchanges Between Related Persons, Related persons. File 2012 taxes late online Section 1231 gains and losses, Section 1231 Gains and Losses Section 1245 property Defined, Section 1245 Property Gain, ordinary income, Gain Treated as Ordinary Income Multiple asset accounts, Multiple asset accounts. File 2012 taxes late online Section 1250 property Additional depreciation, Additional Depreciation Defined, Section 1250 property defined. File 2012 taxes late online Foreclosure, Foreclosure. File 2012 taxes late online Gain, ordinary income, Gain Treated as Ordinary Income Nonresidential, Nonresidential real property. File 2012 taxes late online Residential, Residential rental property. File 2012 taxes late online Section 197 intangibles, Section 197 Intangibles Severance damages, Severance damages. File 2012 taxes late online Silver, Precious Metals and Stones, Stamps, and Coins Small business stock, Gains on Sales of Qualified Small Business Stock Specialized small business investment company (SSBIC), rollover of gain into, Rollover of Gain From Publicly Traded Securities Stamps, Precious Metals and Stones, Stamps, and Coins Stock Capital asset, Capital Assets Controlling interest, corporation, Controlling interest in a corporation. File 2012 taxes late online Indirect ownership, Ownership of stock or partnership interests. File 2012 taxes late online Property exchanged for, Property Exchanged for Stock Publicly traded securities, Rollover of Gain From Publicly Traded Securities Small business, Gains on Sales of Qualified Small Business Stock Suggestions, Comments and suggestions. File 2012 taxes late online T Tax help, How To Get Tax Help Tax rates, capital gain, Capital Gains Tax Rates Thefts, Section 1231 transactions. File 2012 taxes late online Timber, Timber, Section 1231 transactions. File 2012 taxes late online Trade name, Franchise, Trademark, or Trade Name Trademark, Franchise, Trademark, or Trade Name Transfers to spouse, Transfers to Spouse U U. File 2012 taxes late online S. File 2012 taxes late online Treasury bonds, U. File 2012 taxes late online S. File 2012 taxes late online Treasury Notes or Bonds Unharvested crops, Section 1231 transactions. File 2012 taxes late online Prev  Up     Home   More Online Publications
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The File 2012 Taxes Late Online

File 2012 taxes late online 4. File 2012 taxes late online   Transportation Table of Contents Parking fees. File 2012 taxes late online Advertising display on car. File 2012 taxes late online Car pools. File 2012 taxes late online Hauling tools or instruments. File 2012 taxes late online Union members' trips from a union hall. File 2012 taxes late online Car ExpensesStandard Mileage Rate Actual Car Expenses Leasing a Car Disposition of a Car This chapter discusses expenses you can deduct for business transportation when you are not traveling away from home as defined in chapter 1. File 2012 taxes late online These expenses include the cost of transportation by air, rail, bus, taxi, etc. File 2012 taxes late online , and the cost of driving and maintaining your car. File 2012 taxes late online Transportation expenses include the ordinary and necessary costs of all of the following. File 2012 taxes late online Getting from one workplace to another in the course of your business or profession when you are traveling within the city or general area that is your tax home. File 2012 taxes late online Tax home is defined in chapter 1. File 2012 taxes late online Visiting clients or customers. File 2012 taxes late online Going to a business meeting away from your regular workplace. File 2012 taxes late online Getting from your home to a temporary workplace when you have one or more regular places of work. File 2012 taxes late online These temporary workplaces can be either within the area of your tax home or outside that area. File 2012 taxes late online Transportation expenses do not include expenses you have while traveling away from home overnight. File 2012 taxes late online Those expenses are travel expenses discussed in chapter 1 . File 2012 taxes late online However, if you use your car while traveling away from home overnight, use the rules in this chapter to figure your car expense deduction. File 2012 taxes late online See Car Expenses , later. File 2012 taxes late online Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. File 2012 taxes late online However, there may be exceptions to this general rule. File 2012 taxes late online You can deduct daily transportation expenses incurred going between your residence and a temporary work station outside the metropolitan area where you live. File 2012 taxes late online Also, daily transportation expenses can be deducted if: (1) you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance. File 2012 taxes late online Illustration of transportation expenses. File 2012 taxes late online    Figure B , earlier, illustrates the rules that apply for deducting transportation expenses when you have a regular or main job away from your home. File 2012 taxes late online You may want to refer to it when deciding whether you can deduct your transportation expenses. File 2012 taxes late online Temporary work location. File 2012 taxes late online   If you have one or more regular work locations away from your home and you commute to a temporary work location in the same trade or business, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. File 2012 taxes late online   If your employment at a work location is realistically expected to last (and does in fact last) for 1 year or less, the employment is temporary unless there are facts and circumstances that would indicate otherwise. File 2012 taxes late online   If your employment at a work location is realistically expected to last for more than 1 year or if there is no realistic expectation that the employment will last for 1 year or less, the employment is not temporary, regardless of whether it actually lasts for more than 1 year. File 2012 taxes late online   If employment at a work location initially is realistically expected to last for 1 year or less, but at some later date the employment is realistically expected to last more than 1 year, that employment will be treated as temporary (unless there are facts and circumstances that would indicate otherwise) until your expectation changes. File 2012 taxes late online It will not be treated as temporary after the date you determine it will last more than 1 year. File 2012 taxes late online   If the temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. File 2012 taxes late online You may have deductible travel expenses as discussed in chapter 1 . File 2012 taxes late online No regular place of work. File 2012 taxes late online   If you have no regular place of work but ordinarily work in the metropolitan area where you live, you can deduct daily transportation costs between home and a temporary work site outside that metropolitan area. File 2012 taxes late online   Generally, a metropolitan area includes the area within the city limits and the suburbs that are considered part of that metropolitan area. File 2012 taxes late online   You cannot deduct daily transportation costs between your home and temporary work sites within your metropolitan area. File 2012 taxes late online These are nondeductible commuting expenses. File 2012 taxes late online Two places of work. File 2012 taxes late online   If you work at two places in one day, whether or not for the same employer, you can deduct the expense of getting from one workplace to the other. File 2012 taxes late online However, if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second. File 2012 taxes late online   Transportation expenses you have in going between home and a part-time job on a day off from your main job are commuting expenses. File 2012 taxes late online You cannot deduct them. File 2012 taxes late online Armed Forces reservists. File 2012 taxes late online   A meeting of an Armed Forces reserve unit is a second place of business if the meeting is held on a day on which you work at your regular job. File 2012 taxes late online You can deduct the expense of getting from one workplace to the other as just discussed under Two places of work . File 2012 taxes late online   You usually cannot deduct the expense if the reserve meeting is held on a day on which you do not work at your regular job. File 2012 taxes late online In this case, your transportation generally is a nondeductible commuting expense. File 2012 taxes late online However, you can deduct your transportation expenses if the location of the meeting is temporary and you have one or more regular places of work. File 2012 taxes late online   If you ordinarily work in a particular metropolitan area but not at any specific location and the reserve meeting is held at a temporary location outside that metropolitan area, you can deduct your transportation expenses. File 2012 taxes late online   If you travel away from home overnight to attend a guard or reserve meeting, you can deduct your travel expenses. File 2012 taxes late online These expenses are discussed in chapter 1 . File 2012 taxes late online   If you travel more than 100 miles away from home in connection with your performance of services as a member of the reserves, you may be able to deduct some of your reserve-related travel costs as an adjustment to gross income rather than as an itemized deduction. File 2012 taxes late online For more information, see Armed Forces Reservists Traveling More Than 100 Miles From Home under Special Rules, in chapter 6. File 2012 taxes late online Commuting expenses. File 2012 taxes late online   You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. File 2012 taxes late online These costs are personal commuting expenses. File 2012 taxes late online You cannot deduct commuting expenses no matter how far your home is from your regular place of work. File 2012 taxes late online You cannot deduct commuting expenses even if you work during the commuting trip. File 2012 taxes late online Example. File 2012 taxes late online You sometimes use your cell phone to make business calls while commuting to and from work. File 2012 taxes late online Sometimes business associates ride with you to and from work, and you have a business discussion in the car. File 2012 taxes late online These activities do not change the trip from personal to business. File 2012 taxes late online You cannot deduct your commuting expenses. File 2012 taxes late online Parking fees. File 2012 taxes late online    Fees you pay to park your car at your place of business are nondeductible commuting expenses. File 2012 taxes late online You can, however, deduct business-related parking fees when visiting a customer or client. File 2012 taxes late online Advertising display on car. File 2012 taxes late online   Putting display material that advertises your business on your car does not change the use of your car from personal use to business use. File 2012 taxes late online If you use this car for commuting or other personal uses, you still cannot deduct your expenses for those uses. File 2012 taxes late online Car pools. File 2012 taxes late online   You cannot deduct the cost of using your car in a nonprofit car pool. File 2012 taxes late online Do not include payments you receive from the passengers in your income. File 2012 taxes late online These payments are considered reimbursements of your expenses. File 2012 taxes late online However, if you operate a car pool for a profit, you must include payments from passengers in your income. File 2012 taxes late online You can then deduct your car expenses (using the rules in this publication). File 2012 taxes late online Hauling tools or instruments. File 2012 taxes late online   Hauling tools or instruments in your car while commuting to and from work does not make your car expenses deductible. File 2012 taxes late online However, you can deduct any additional costs you have for hauling tools or instruments (such as for renting a trailer you tow with your car). File 2012 taxes late online Union members' trips from a union hall. File 2012 taxes late online   If you get your work assignments at a union hall and then go to your place of work, the costs of getting from the union hall to your place of work are nondeductible commuting expenses. File 2012 taxes late online Although you need the union to get your work assignments, you are employed where you work, not where the union hall is located. File 2012 taxes late online Office in the home. File 2012 taxes late online   If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. File 2012 taxes late online (See Publication 587, Business Use of Your Home, for information on determining if your home office qualifies as a principal place of business. File 2012 taxes late online ) Examples of deductible transportation. File 2012 taxes late online   The following examples show when you can deduct transportation expenses based on the location of your work and your home. File 2012 taxes late online Example 1. File 2012 taxes late online You regularly work in an office in the city where you live. File 2012 taxes late online Your employer sends you to a 1-week training session at a different office in the same city. File 2012 taxes late online You travel directly from your home to the training location and return each day. File 2012 taxes late online You can deduct the cost of your daily round-trip transportation between your home and the training location. File 2012 taxes late online Example 2. File 2012 taxes late online Your principal place of business is in your home. File 2012 taxes late online You can deduct the cost of round-trip transportation between your qualifying home office and your client's or customer's place of business. File 2012 taxes late online Example 3. File 2012 taxes late online You have no regular office, and you do not have an office in your home. File 2012 taxes late online In this case, the location of your first business contact inside the metropolitan area is considered your office. File 2012 taxes late online Transportation expenses between your home and this first contact are nondeductible commuting expenses. File 2012 taxes late online Transportation expenses between your last business contact and your home are also nondeductible commuting expenses. File 2012 taxes late online While you cannot deduct the costs of these trips, you can deduct the costs of going from one client or customer to another. File 2012 taxes late online Car Expenses If you use your car for business purposes, you ordinarily can deduct car expenses. File 2012 taxes late online You generally can use one of the two following methods to figure your deductible expenses. File 2012 taxes late online Standard mileage rate. File 2012 taxes late online Actual car expenses. File 2012 taxes late online If you use actual expenses to figure your deduction for a car you lease, there are rules that affect the amount of your lease payments you can deduct. File 2012 taxes late online See Leasing a Car , later. File 2012 taxes late online In this publication, “car” includes a van, pickup, or panel truck. File 2012 taxes late online For the definition of “car” for depreciation purposes, see Car defined under Actual Car Expenses, later. File 2012 taxes late online Rural mail carriers. File 2012 taxes late online   If you are a rural mail carrier, you may be able to treat the qualified reimbursement you received as your allowable expense. File 2012 taxes late online Because the qualified reimbursement is treated as paid under an accountable plan, your employer should not include the reimbursement in your income. File 2012 taxes late online   If your vehicle expenses are more than the amount of your reimbursement, you can deduct the unreimbursed expenses as an itemized deduction on Schedule A (Form 1040). File 2012 taxes late online You must complete Form 2106 and attach it to your Form 1040, U. File 2012 taxes late online S. File 2012 taxes late online Individual Income Tax Return. File 2012 taxes late online   A “qualified reimbursement” is the reimbursement you receive that meets both of the following conditions. File 2012 taxes late online It is given as an equipment maintenance allowance (EMA) to employees of the U. File 2012 taxes late online S. File 2012 taxes late online Postal Service. File 2012 taxes late online It is at the rate contained in the 1991 collective bargaining agreement. File 2012 taxes late online Any later agreement cannot increase the qualified reimbursement amount by more than the rate of inflation. File 2012 taxes late online See your employer for information on your reimbursement. File 2012 taxes late online    If you are a rural mail carrier and received a qualified reimbursement, you cannot use the standard mileage rate. File 2012 taxes late online Standard Mileage Rate You may be able to use the standard mileage rate to figure the deductible costs of operating your car for business purposes. File 2012 taxes late online For 2013, the standard mileage rate for the cost of operating your car for business use is 56½ cents per mile. File 2012 taxes late online If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. File 2012 taxes late online You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees. File 2012 taxes late online See Choosing the standard mileage rate and Standard mileage rate not allowed, later. File 2012 taxes late online You generally can use the standard mileage rate whether or not you are reimbursed and whether or not any reimbursement is more or less than the amount figured using the standard mileage rate. File 2012 taxes late online See chapter 6 for more information on reimbursements . File 2012 taxes late online Choosing the standard mileage rate. File 2012 taxes late online   If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. File 2012 taxes late online Then, in later years, you can choose to use either the standard mileage rate or actual expenses. File 2012 taxes late online   If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period. File 2012 taxes late online For leases that began on or before December 31, 1997, the standard mileage rate must be used for the entire portion of the lease period (including renewals) that is after 1997. File 2012 taxes late online   You must make the choice to use the standard mileage rate by the due date (including extensions) of your return. File 2012 taxes late online You cannot revoke the choice. File 2012 taxes late online However, in later years, you can switch from the standard mileage rate to the actual expenses method. File 2012 taxes late online If you change to the actual expenses method in a later year, but before your car is fully depreciated, you have to estimate the remaining useful life of the car and use straight line depreciation. File 2012 taxes late online Example. File 2012 taxes late online Larry is an employee who occasionally uses his own car for business purposes. File 2012 taxes late online He purchased the car in 2011, but he did not claim any unreimbursed employee expenses on his 2011 tax return. File 2012 taxes late online Because Larry did not use the standard mileage rate the first year the car was available for business use, he cannot use the standard mileage rate in 2013 to claim unreimbursed employee business expenses. File 2012 taxes late online   For more information about depreciation included in the standard mileage rate, see Exception under Methods of depreciation, later. File 2012 taxes late online Standard mileage rate not allowed. File 2012 taxes late online   You cannot use the standard mileage rate if you: Use five or more cars at the same time (such as in fleet operations), Claimed a depreciation deduction for the car using any method other than straight line, for example, MACRS (as discussed later under Depreciation Deduction), Claimed a section 179 deduction (discussed later) on the car, Claimed the special depreciation allowance on the car, Claimed actual car expenses after 1997 for a car you leased, or Are a rural mail carrier who received a qualified reimbursement. File 2012 taxes late online (See Rural mail carriers , earlier. File 2012 taxes late online ) Note. File 2012 taxes late online You can elect to use the standard mileage rate if you used a car for hire (such as a taxi) unless the standard mileage rate is otherwise not allowed, as discussed above. File 2012 taxes late online Five or more cars. File 2012 taxes late online   If you own or lease five or more cars that are used for business at the same time, you cannot use the standard mileage rate for the business use of any car. File 2012 taxes late online However, you may be able to deduct your actual expenses for operating each of the cars in your business. File 2012 taxes late online See Actual Car Expenses , later, for information on how to figure your deduction. File 2012 taxes late online   You are not using five or more cars for business at the same time if you alternate using (use at different times) the cars for business. File 2012 taxes late online   The following examples illustrate the rules for when you can and cannot use the standard mileage rate for five or more cars. File 2012 taxes late online Example 1. File 2012 taxes late online Marcia, a salesperson, owns three cars and two vans that she alternates using for calling on her customers. File 2012 taxes late online She can use the standard mileage rate for the business mileage of the three cars and the two vans because she does not use them at the same time. File 2012 taxes late online Example 2. File 2012 taxes late online Tony and his employees use his four pickup trucks in his landscaping business. File 2012 taxes late online During the year, he traded in two of his old trucks for two newer ones. File 2012 taxes late online Tony can use the standard mileage rate for the business mileage of all six of the trucks he owned during the year. File 2012 taxes late online Example 3. File 2012 taxes late online Chris owns a repair shop and an insurance business. File 2012 taxes late online He and his employees use his two pickup trucks and van for the repair shop. File 2012 taxes late online Chris alternates using his two cars for the insurance business. File 2012 taxes late online No one else uses the cars for business purposes. File 2012 taxes late online Chris can use the standard mileage rate for the business use of the pickup trucks, van, and the cars because he never has more than four vehicles used for business at the same time. File 2012 taxes late online Example 4. File 2012 taxes late online Maureen owns a car and four vans that are used in her housecleaning business. File 2012 taxes late online Her employees use the vans, and she uses the car to travel to various customers. File 2012 taxes late online Maureen cannot use the standard mileage rate for the car or the vans. File 2012 taxes late online This is because all five vehicles are used in Maureen's business at the same time. File 2012 taxes late online She must use actual expenses for all vehicles. File 2012 taxes late online Interest. File 2012 taxes late online   If you are an employee, you cannot deduct any interest paid on a car loan. File 2012 taxes late online This applies even if you use the car 100% for business as an employee. File 2012 taxes late online   However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. File 2012 taxes late online For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). File 2012 taxes late online You cannot deduct the part of the interest expense that represents your personal use of the car. File 2012 taxes late online    If you use a home equity loan to purchase your car, you may be able to deduct the interest. File 2012 taxes late online See Publication 936, Home Mortgage Interest Deduction, for more information. File 2012 taxes late online Personal property taxes. File 2012 taxes late online   If you itemize your deductions on Schedule A (Form 1040), you can deduct on line 7 state and local personal property taxes on motor vehicles. File 2012 taxes late online You can take this deduction even if you use the standard mileage rate or if you do not use the car for business. File 2012 taxes late online   If you are self-employed and use your car in your business, you can deduct the business part of state and local personal property taxes on motor vehicles on Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040). File 2012 taxes late online If you itemize your deductions, you can include the remainder of your state and local personal property taxes on the car on Schedule A (Form 1040). File 2012 taxes late online Parking fees and tolls. File 2012 taxes late online   In addition to using the standard mileage rate, you can deduct any business-related parking fees and tolls. File 2012 taxes late online (Parking fees you pay to park your car at your place of work are nondeductible commuting expenses. File 2012 taxes late online ) Sale, trade-in, or other disposition. File 2012 taxes late online   If you sell, trade in, or otherwise dispose of your car, you may have a gain or loss on the transaction or an adjustment to the basis of your new car. File 2012 taxes late online See Disposition of a Car , later. File 2012 taxes late online Actual Car Expenses If you do not use the standard mileage rate, you may be able to deduct your actual car expenses. File 2012 taxes late online If you qualify to use both methods, you may want to figure your deduction both ways to see which gives you a larger deduction. File 2012 taxes late online Actual car expenses include: Depreciation Licenses Lease  payments Registration  fees Gas Insurance Repairs Oil Garage rent Tires Tolls Parking fees   If you have fully depreciated a car that you still use in your business, you can continue to claim your other actual car expenses. File 2012 taxes late online Continue to keep records, as explained later in chapter 5 . File 2012 taxes late online Business and personal use. File 2012 taxes late online   If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. File 2012 taxes late online You can divide your expense based on the miles driven for each purpose. File 2012 taxes late online Example. File 2012 taxes late online You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. File 2012 taxes late online You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense. File 2012 taxes late online Employer-provided vehicle. File 2012 taxes late online   If you use a vehicle provided by your employer for business purposes, you can deduct your actual unreimbursed car expenses. File 2012 taxes late online You cannot use the standard mileage rate. File 2012 taxes late online See Vehicle Provided by Your Employer in chapter 6. File 2012 taxes late online Interest on car loans. File 2012 taxes late online   If you are an employee, you cannot deduct any interest paid on a car loan. File 2012 taxes late online This interest is treated as personal interest and is not deductible. File 2012 taxes late online If you are self-employed and use your car in that business, see Interest , earlier, under Standard Mileage Rate. File 2012 taxes late online Taxes paid on your car. File 2012 taxes late online   If you are an employee, you can deduct personal property taxes paid on your car if you itemize deductions. File 2012 taxes late online Enter the amount paid on line 7 of Schedule A (Form 1040). File 2012 taxes late online Sales taxes. File 2012 taxes late online   Generally, sales taxes on your car are part of your car's basis and are recovered through depreciation, discussed later. File 2012 taxes late online Fines and collateral. File 2012 taxes late online   You cannot deduct fines you pay or collateral you forfeit for traffic violations. File 2012 taxes late online Casualty and theft losses. File 2012 taxes late online   If your car is damaged, destroyed, or stolen, you may be able to deduct part of the loss not covered by insurance. File 2012 taxes late online See Publication 547, Casualties, Disasters, and Thefts, for information on deducting a loss on your car. File 2012 taxes late online Depreciation and section 179 deductions. File 2012 taxes late online   Generally, the cost of a car, plus sales tax and improvements, is a capital expense. File 2012 taxes late online Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. File 2012 taxes late online However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. File 2012 taxes late online Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. File 2012 taxes late online The section 179 deduction , special depreciation allowance , and depreciation deductions are discussed later. File 2012 taxes late online   Generally, there are limits on these deductions. File 2012 taxes late online Special rules apply if you use your car 50% or less in your work or business. File 2012 taxes late online   You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service. File 2012 taxes late online   If, in the year you first place a car in service, you claim either a section 179 deduction or use a depreciation method other than straight line for its estimated useful life, you cannot use the standard mileage rate on that car in any future year. File 2012 taxes late online Car defined. File 2012 taxes late online   For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. File 2012 taxes late online Its unloaded gross vehicle weight must not be more than 6,000 pounds. File 2012 taxes late online A car includes any part, component, or other item physically attached to it or usually included in the purchase price. File 2012 taxes late online   A car does not include: An ambulance, hearse, or combination ambulance-hearse used directly in a business, A vehicle used directly in the business of transporting persons or property for pay or hire, or A truck or van that is a qualified nonpersonal use vehicle. File 2012 taxes late online Qualified nonpersonal use vehicles. File 2012 taxes late online   These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. File 2012 taxes late online They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. File 2012 taxes late online Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles. File 2012 taxes late online More information. File 2012 taxes late online   See Depreciation Deduction , later, for more information on how to depreciate your vehicle. File 2012 taxes late online Section 179 Deduction The section 179 deduction allows you to treat a portion or all of the cost of a car as a current expense. File 2012 taxes late online If you choose to deduct all or part of the cost as a current expense, you must reduce your depreciable basis in the car by the amount of the section 179 deduction. File 2012 taxes late online There is a limit on the total section 179 deduction, special depreciation allowance, and depreciation deduction for cars, trucks, and vans that may reduce or eliminate any benefit from claiming the section 179 deduction. File 2012 taxes late online See Depreciation Limits, later. File 2012 taxes late online You can claim the section 179 deduction only in the year you place the car in service. File 2012 taxes late online For this purpose, a car is placed in service when it is ready and available for a specifically assigned use, whether in a trade or business, a tax-exempt activity, a personal activity, or for the production of income. File 2012 taxes late online Even if you are not using the property, it is in service when it is ready and available for its specifically assigned use. File 2012 taxes late online A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business. File 2012 taxes late online Example. File 2012 taxes late online In 2012, you bought a new car and used it for personal purposes. File 2012 taxes late online In 2013, you began to use it for business. File 2012 taxes late online Changing its use to business use does not qualify the cost of your car for a section 179 deduction in 2013. File 2012 taxes late online However, you can claim a depreciation deduction for the business use of the car starting in 2013. File 2012 taxes late online See Depreciation Deduction , later. File 2012 taxes late online More than 50% business use requirement. File 2012 taxes late online   You must use the property more than 50% for business to claim any section 179 deduction. File 2012 taxes late online If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. File 2012 taxes late online The result is the cost of the property that can qualify for the section 179 deduction. File 2012 taxes late online Example. File 2012 taxes late online Peter purchased a car in April 2013 for $24,500 and used it 60% for business. File 2012 taxes late online Based on his business usage, the total cost of Peter's car that qualifies for the section 179 deduction is $14,700 ($24,500 cost × 60% business use). File 2012 taxes late online But see Limit on total section 179, special depreciation allowance, and depreciation deduction , discussed later. File 2012 taxes late online Limits. File 2012 taxes late online   There are limits on: The amount of the section 179 deduction, The section 179 deduction for sport utility and certain other vehicles, and The total amount of the section 179 deduction, special depreciation allowance, and depreciation deduction (discussed later ) you can claim for a qualified property. File 2012 taxes late online Limit on the amount of the section 179 deduction. File 2012 taxes late online   For 2013, the total amount you can choose to deduct under section 179 generally cannot be more than $500,000. File 2012 taxes late online   If the cost of your section 179 property placed in service in 2013 is over $2,000,000, you must reduce the $500,000 dollar limit (but not below zero) by the amount of cost over $2,000,000. File 2012 taxes late online If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 deduction. File 2012 taxes late online   The total amount you can deduct under section 179 each year after you apply the limits listed above cannot be more than the taxable income from the active conduct of any trade or business during the year. File 2012 taxes late online   If you are married and file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. File 2012 taxes late online   If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit. File 2012 taxes late online You must allocate the dollar limit (after any reduction) between you. File 2012 taxes late online   For more information on the above section 179 deduction limits, see Publication 946. File 2012 taxes late online Limit for sport utility and certain other vehicles. File 2012 taxes late online   For sport utility and certain other vehicles placed in service in 2013, the portion of the vehicle's cost taken into account in figuring your section 179 deduction is limited to $25,000. File 2012 taxes late online This rule applies to any four-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is not subject to any of the passenger automobile limits explained under Depreciation Limits , later, and that is rated at no more than 14,000 pounds gross vehicle weight. File 2012 taxes late online However, the $25,000 limit does not apply to any vehicle: Designed to have a seating capacity of more than nine persons behind the driver's seat, Equipped with a cargo area of at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or That has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield. File 2012 taxes late online    Limit on total section 179, special depreciation allowance, and depreciation deduction. File 2012 taxes late online   Generally, the total amount of section 179, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2013 is $11,160. File 2012 taxes late online The limit is reduced if your business use of the car is less than 100%. File 2012 taxes late online See Depreciation Limits , later, for more information. File 2012 taxes late online Example. File 2012 taxes late online In the earlier example under More than 50% business use requirement, Peter had a car with a cost (for purposes of the section 179 deduction) of $14,700. File 2012 taxes late online However, based on Peter's business usage of his car, the total of his section 179, special depreciation allowance, and depreciation deductions is limited to $6,696 ($11,160 limit x 60% business use). File 2012 taxes late online Cost of car. File 2012 taxes late online   For purposes of the section 179 deduction, the cost of the car does not include any amount figured by reference to any other property held by you at any time. File 2012 taxes late online For example, if you buy (for cash and a trade-in) a new car to use in your business, your cost for purposes of the section 179 deduction does not include your adjusted basis in the car you trade in for the new car. File 2012 taxes late online Your cost includes only the cash you paid. File 2012 taxes late online Basis of car for depreciation. File 2012 taxes late online   The amount of the section 179 deduction reduces your basis in your car. File 2012 taxes late online If you choose the section 179 deduction, you must subtract the amount of the deduction from the cost of your car. File 2012 taxes late online The resulting amount is the basis in your car you use to figure your depreciation deduction. File 2012 taxes late online When to choose. File 2012 taxes late online   If you want to take the section 179 deduction, you must make the choice in the tax year you place the car in service for business or work. File 2012 taxes late online How to choose. File 2012 taxes late online    Employees use Form 2106 to make this choice and report the section 179 deduction. File 2012 taxes late online All others use Form 4562. File 2012 taxes late online   File the appropriate form with either of the following. File 2012 taxes late online Your original tax return filed for the year the property was placed in service (whether or not you file it timely). File 2012 taxes late online An amended return filed within the time prescribed by law. File 2012 taxes late online An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. File 2012 taxes late online The amended return must also include any resulting adjustments to taxable income. File 2012 taxes late online    You must keep records that show the specific identification of each piece of qualifying section 179 property. File 2012 taxes late online These records must show how you acquired the property, the person you acquired it from, and when you placed it in service. File 2012 taxes late online Revoking an election. File 2012 taxes late online   An election (or any specification made in the election) to take a section 179 deduction for 2013 can only be revoked with the Commissioner's approval. File 2012 taxes late online Recapture of section 179 deduction. File 2012 taxes late online   To be eligible to claim the section 179 deduction, you must use your car more than 50% for business or work in the year you acquired it. File 2012 taxes late online If your business use of the car is 50% or less in a later tax year during the recovery period, you have to recapture (include in income) in that later year any excess depreciation. File 2012 taxes late online Any section 179 deduction claimed on the car is included in calculating the excess depreciation. File 2012 taxes late online For information on this calculation, see Excess depreciation , later in this chapter under Car Used 50% or Less for Business. File 2012 taxes late online Dispositions. File 2012 taxes late online   If you dispose of a car on which you had claimed the section 179 deduction, the amount of that deduction is treated as a depreciation deduction for recapture purposes. File 2012 taxes late online You treat any gain on the disposition of the property as ordinary income up to the amount of the section 179 deduction and any allowable depreciation (unless you establish the amount actually allowed). File 2012 taxes late online For information on the disposition of a car, see Disposition of a Car , later. File 2012 taxes late online Special Depreciation Allowance You may be able to claim the special depreciation allowance for your car, truck, or van, if it is qualified property and was placed in service in 2013. File 2012 taxes late online The allowance is an additional depreciation deduction of 50% of the car's depreciable basis (after any section 179 deduction, but before figuring your regular depreciation deduction under MACRS). File 2012 taxes late online The special depreciation allowance applies only for the first year the car is placed in service. File 2012 taxes late online To qualify for the allowance more than 50% of the use of the car must be in a qualified business use (as defined under Depreciation Deduction, later). File 2012 taxes late online Combined depreciation. File 2012 taxes late online   Your combined section 179 deduction, special depreciation allowance, and regular MACRS depreciation deduction is limited to the maximum allowable depreciation deduction for cars of $11,160 ($3,160 if you elect not to claim the special depreciation allowance). File 2012 taxes late online For trucks and vans, the first-year limit remains at $11,360 ($3,360 if you elect not to claim the special depreciation allowance). File 2012 taxes late online See Depreciation Limits , later in this chapter. File 2012 taxes late online Qualified car. File 2012 taxes late online   To be a qualified car (including trucks and vans), the car must meet all of the following tests. File 2012 taxes late online You purchased the car new on or after January 1, 2008, but only if no binding written contract to acquire the car existed before January 1, 2008, You placed the car in service in your trade or business before January 1, 2014, You used the car more than 50% in a qualified business use. File 2012 taxes late online Election not to claim the special depreciation allowance. File 2012 taxes late online   You can elect not to claim the special depreciation allowance for your car, truck, or van, that is qualified property. File 2012 taxes late online If you make this election, it applies to all 5-year property placed in service during the year. File 2012 taxes late online   To make the election, attach a statement to your timely filed return (including extensions) indicating the class of property (5-year for cars) for which you are making the election and that you are electing not to claim the special depreciation allowance for qualified property acquired on or after January 1, 2008. File 2012 taxes late online    Unless you elect not to claim the special depreciation allowance, you must reduce the car's adjusted basis by the amount of the allowance, even if the allowance was not claimed. File 2012 taxes late online Depreciation Deduction If you use actual car expenses to figure your deduction for a car you own and use in your business, you can claim a depreciation deduction. File 2012 taxes late online This means you can deduct a certain amount each year as a recovery of your cost or other basis in your car. File 2012 taxes late online You generally need to know the following things about the car you intend to depreciate. File 2012 taxes late online Your basis in the car. File 2012 taxes late online The date you place the car in service. File 2012 taxes late online The method of depreciation and recovery period you will use. File 2012 taxes late online Basis. File 2012 taxes late online   Your basis in a car for figuring depreciation is generally its cost. File 2012 taxes late online This includes any amount you borrow or pay in cash, other property, or services. File 2012 taxes late online   Generally, you figure depreciation on your car, truck, or van using your unadjusted basis (see Unadjusted basis , later). File 2012 taxes late online However, in some situations you will use your adjusted basis (your basis reduced by depreciation allowed or allowable in earlier years). File 2012 taxes late online For one of these situations see Exception under Methods of depreciation, later. File 2012 taxes late online   If you change the use of a car from personal to business, your basis for depreciation is the lesser of the fair market value or your adjusted basis in the car on the date of conversion. File 2012 taxes late online Additional rules concerning basis are discussed later in this chapter under Unadjusted basis . File 2012 taxes late online Placed in service. File 2012 taxes late online   You generally place a car in service when it is available for use in your work or business, in an income-producing activity, or in a personal activity. File 2012 taxes late online Depreciation begins when the car is placed in service for use in your work or business or for the production of income. File 2012 taxes late online   For purposes of computing depreciation, if you first start using the car only for personal use and later convert it to business use, you place the car in service on the date of conversion. File 2012 taxes late online Car placed in service and disposed of in the same year. File 2012 taxes late online   If you place a car in service and dispose of it in the same tax year, you cannot claim any depreciation deduction for that car. File 2012 taxes late online Methods of depreciation. File 2012 taxes late online   Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). File 2012 taxes late online MACRS is discussed later in this chapter. File 2012 taxes late online Exception. File 2012 taxes late online   If you used the standard mileage rate in the first year of business use and change to the actual expenses method in a later year, you cannot depreciate your car under the MACRS rules. File 2012 taxes late online You must use straight line depreciation over the estimated remaining useful life of the car. File 2012 taxes late online   To figure depreciation under the straight line method, you must reduce your basis in the car (but not below zero) by a set rate per mile for all miles for which you used the standard mileage rate. File 2012 taxes late online The rate per mile varies depending on the year(s) you used the standard mileage rate. File 2012 taxes late online For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later. File 2012 taxes late online   This reduction of basis is in addition to those basis adjustments described later under Unadjusted basis . File 2012 taxes late online You must use your adjusted basis in your car to figure your depreciation deduction. File 2012 taxes late online For additional information on the straight line method of depreciation, see Publication 946. File 2012 taxes late online More-than-50%-use test. File 2012 taxes late online   Generally, you must use your car more than 50% for qualified business use (defined next) during the year to use MACRS. File 2012 taxes late online You must meet this more-than-50%-use test each year of the recovery period (6 years under MACRS) for your car. File 2012 taxes late online   If your business use is 50% or less, you must use the straight line method to depreciate your car. File 2012 taxes late online This is explained later under Car Used 50% or Less for Business . File 2012 taxes late online Qualified business use. File 2012 taxes late online   A qualified business use is any use in your trade or business. File 2012 taxes late online It does not include use for the production of income (investment use). File 2012 taxes late online However, you do combine your business and investment use to compute your depreciation deduction for the tax year. File 2012 taxes late online Use of your car by another person. File 2012 taxes late online   Do not treat any use of your car by another person as use in your trade or business unless that use meets one of the following conditions. File 2012 taxes late online It is directly connected with your business. File 2012 taxes late online It is properly reported by you as income to the other person (and, if you have to, you withhold tax on the income). File 2012 taxes late online It results in a payment of fair market rent. File 2012 taxes late online This includes any payment to you for the use of your car. File 2012 taxes late online Business use changes. File 2012 taxes late online   If you used your car more than 50% in qualified business use in the year you placed it in service, but 50% or less in a later year (including the year of disposition), you have to change to the straight line method of depreciation. File 2012 taxes late online See Qualified business use 50% or less in a later year under Car Used 50% or Less for Business, later. File 2012 taxes late online    Property does not cease to be used more than 50% in qualified business use by reason of a transfer at death. File 2012 taxes late online Use for more than one purpose. File 2012 taxes late online   If you use your car for more than one purpose during the tax year, you must allocate the use to the various purposes. File 2012 taxes late online You do this on the basis of mileage. File 2012 taxes late online Figure the percentage of qualified business use by dividing the number of miles you drive your car for business purposes during the year by the total number of miles you drive the car during the year for any purpose. File 2012 taxes late online Change from personal to business use. File 2012 taxes late online   If you change the use of a car from 100% personal use to business use during the tax year, you may not have mileage records for the time before the change to business use. File 2012 taxes late online In this case, you figure the percentage of business use for the year as follows. File 2012 taxes late online Determine the percentage of business use for the period following the change. File 2012 taxes late online Do this by dividing business miles by total miles driven during that period. File 2012 taxes late online Multiply the percentage in (1) by a fraction. File 2012 taxes late online The numerator (top number) is the number of months the car is used for business and the denominator (bottom number) is 12. File 2012 taxes late online Example. File 2012 taxes late online You use a car only for personal purposes during the first 6 months of the year. File 2012 taxes late online During the last 6 months of the year, you drive the car a total of 15,000 miles of which 12,000 miles are for business. File 2012 taxes late online This gives you a business use percentage of 80% (12,000 ÷ 15,000) for that period. File 2012 taxes late online Your business use for the year is 40% (80% × 6/12). File 2012 taxes late online Limits. File 2012 taxes late online   The amount you can claim for section 179, special depreciation allowance, and depreciation deductions may be limited. File 2012 taxes late online The maximum amount you can claim depends on the year in which you placed your car in service. File 2012 taxes late online You have to reduce the maximum amount if you did not use the car exclusively for business. File 2012 taxes late online See Depreciation Limits , later. File 2012 taxes late online Unadjusted basis. File 2012 taxes late online   You use your unadjusted basis (often referred to as your basis or your basis for depreciation) to figure your depreciation using the MACRS depreciation chart, explained later under Modified Accelerated Cost Recovery System (MACRS) . File 2012 taxes late online Your unadjusted basis for figuring depreciation is your original basis increased or decreased by certain amounts. File 2012 taxes late online   To figure your unadjusted basis, begin with your car's original basis, which generally is its cost. File 2012 taxes late online Cost includes sales taxes (see Sales taxes , earlier), destination charges, and dealer preparation. File 2012 taxes late online Increase your basis by any substantial improvements you make to your car, such as adding air conditioning or a new engine. File 2012 taxes late online Decrease your basis by any section 179 deduction, special depreciation allowance, gas guzzler tax, clean-fuel vehicle deduction (for vehicles placed in service before Jan. File 2012 taxes late online 1, 2006), and alternative motor vehicle credit. File 2012 taxes late online   See Form 8910 for information on the alternative motor vehicle credit. File 2012 taxes late online If your business use later falls to 50% or less, you may have to recapture (include in your income) any excess depreciation. File 2012 taxes late online See Car Used 50% or Less for Business, later, for more information. File 2012 taxes late online If you acquired the car by gift or inheritance, see Publication 551, Basis of Assets, for information on your basis in the car. File 2012 taxes late online Improvements. File 2012 taxes late online   A major improvement to a car is treated as a new item of 5-year recovery property. File 2012 taxes late online It is treated as placed in service in the year the improvement is made. File 2012 taxes late online It does not matter how old the car is when the improvement is added. File 2012 taxes late online Follow the same steps for depreciating the improvement as you would for depreciating the original cost of the car. File 2012 taxes late online However, you must treat the improvement and the car as a whole when applying the limits on the depreciation deductions. File 2012 taxes late online Your car's depreciation deduction for the year (plus any section 179 deduction, special depreciation allowance, and depreciation on any improvements) cannot be more than the depreciation limit that applies for that year. File 2012 taxes late online See Depreciation Limits , later. File 2012 taxes late online Car trade-in. File 2012 taxes late online   If you traded one car (the “old car”) for another car (the “new car”) in 2013, there are two ways you can treat the transaction. File 2012 taxes late online You can elect to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. File 2012 taxes late online If you make this election, you treat the old car as disposed of at the time of the trade-in. File 2012 taxes late online The depreciable basis of the new car is the adjusted basis of the old car (figured as if 100% of the car's use had been for business purposes) plus any additional amount you paid for the new car. File 2012 taxes late online You then figure your depreciation deduction for the new car beginning with the date you placed it in service. File 2012 taxes late online You make this election by completing Form 2106, Part II, Section D. File 2012 taxes late online This method is explained later, beginning at Effect of trade-in on basis . File 2012 taxes late online If you do not make the election described in (1), you must figure depreciation separately for the remaining basis of the old car and for any additional amount you paid for the new car. File 2012 taxes late online You must apply two depreciation limits (see Depreciation Limits , later). File 2012 taxes late online The limit that applies to the remaining basis of the old car generally is the amount that would have been allowed had you not traded in the old car. File 2012 taxes late online The limit that applies to the additional amount you paid for the new car generally is the limit that applies for the tax year, reduced by the depreciation allowance for the remaining basis of the old car. File 2012 taxes late online You must use Form 4562 to compute your depreciation deduction. File 2012 taxes late online You cannot use Form 2106, Part II, Section D. File 2012 taxes late online This method is explained in Publication 946. File 2012 taxes late online   If you elect to use the method described in (1), you must do so on a timely filed tax return (including extensions). File 2012 taxes late online Otherwise, you must use the method described in (2). File 2012 taxes late online Effect of trade-in on basis. File 2012 taxes late online   The discussion that follows applies to trade-ins of cars in 2013, where the election was made to treat the transaction as a tax-free disposition of the old car and the purchase of the new car. File 2012 taxes late online For information on how to figure depreciation for cars involved in a like-kind exchange (trade-in) in 2013, for which the election was not made, see Publication 946 and Regulations section 1. File 2012 taxes late online 168(i)-6(d)(3). File 2012 taxes late online Traded car used only for business. File 2012 taxes late online   If you trade in a car you used only in your business for another car that will be used only in your business, your original basis in the new car is your adjusted basis in the old car, plus any additional amount you pay for the new car. File 2012 taxes late online Example. File 2012 taxes late online Paul trades in a car that has an adjusted basis of $5,000 for a new car. File 2012 taxes late online In addition, he pays cash of $20,000 for the new car. File 2012 taxes late online His original basis of the new car is $25,000 (his $5,000 adjusted basis in the old car plus the $20,000 cash paid). File 2012 taxes late online Paul's unadjusted basis is $25,000 unless he claims the section 179 deduction, special depreciation allowance, or has other increases or decreases to his original basis, discussed under Unadjusted basis , earlier. File 2012 taxes late online Traded car used partly in business. File 2012 taxes late online   If you trade in a car you used partly in your business for a new car you will use in your business, you must make a “trade-in” adjustment for the personal use of the old car. File 2012 taxes late online This adjustment has the effect of reducing your basis in your old car, but not below zero, for purposes of figuring your depreciation deduction for the new car. File 2012 taxes late online (This adjustment is not used, however, when you determine the gain or loss on the later disposition of the new car. File 2012 taxes late online See Publication 544, Sales and Other Dispositions of Assets, for information on how to report the disposition of your car. File 2012 taxes late online )   To figure the unadjusted basis of your new car for depreciation, first add to your adjusted basis in the old car any additional amount you pay for the new car. File 2012 taxes late online Then subtract from that total the excess, if any, of: The total of the amounts that would have been allowable as depreciation during the tax years before the trade if 100% of the use of the car had been business and investment use, over The total of the amounts actually allowed as depreciation during those years. File 2012 taxes late online For information about figuring depreciation, see Modified Accelerated Cost Recovery System (MACRS) , which follows Example 2, later. File 2012 taxes late online Modified Accelerated Cost Recovery System (MACRS). File 2012 taxes late online   The Modified Accelerated Cost Recovery System (MACRS) is the name given to the tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. File 2012 taxes late online   The maximum amount you can deduct is limited, depending on the year you placed your car in service. File 2012 taxes late online See Depreciation Limits , later. File 2012 taxes late online Recovery period. File 2012 taxes late online   Under MACRS, cars are classified as 5-year property. File 2012 taxes late online You actually depreciate the cost of a car, truck, or van over a period of 6 calendar years. File 2012 taxes late online This is because your car is generally treated as placed in service in the middle of the year, and you claim depreciation for one-half of both the first year and the sixth year. File 2012 taxes late online Depreciation deduction for certain Indian reservation property. File 2012 taxes late online   Shorter recovery periods are provided under MACRS for qualified Indian reservation property placed in service on Indian reservations after 1993 and before 2014. File 2012 taxes late online The recovery that applies for a business-use car is 3 years instead of 5 years. File 2012 taxes late online However, the depreciation limits, discussed later, will still apply. File 2012 taxes late online   For more information on the qualifications for this shorter recovery period and the percentages to use in figuring the depreciation deduction, see chapter 4 of Publication 946. File 2012 taxes late online Depreciation methods. File 2012 taxes late online   You can use one of the following methods to depreciate your car. File 2012 taxes late online The 200% declining balance method (200% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. File 2012 taxes late online The 150% declining balance method (150% DB) over a 5-year recovery period that switches to the straight line method when that method provides an equal or greater deduction. File 2012 taxes late online The straight line method (SL) over a 5-year recovery period. File 2012 taxes late online    If you use Table 4-1 (discussed later under MACRS depreciation chart) to determine your depreciation rate for 2013, you do not need to determine in what year using the straight line method provides an equal or greater deduction. File 2012 taxes late online This is because the chart has the switch to the straight line method built into its rates. File 2012 taxes late online   Before choosing a method, you may wish to consider the following facts. File 2012 taxes late online Using the straight line method provides equal yearly deductions throughout the recovery period. File 2012 taxes late online Using the declining balance methods provides greater deductions during the earlier recovery years with the deductions generally getting smaller each year. File 2012 taxes late online MACRS depreciation chart. File 2012 taxes late online   A 2013 MACRS Depreciation Chart and instructions are included in this chapter as Table 4-1 . File 2012 taxes late online Using this table will make it easy for you to figure the 2013 depreciation deduction for your car. File 2012 taxes late online A similar chart appears in the Instructions for Form 2106. File 2012 taxes late online    You may have to use the tables in Publication 946 instead of using this MACRS Depreciation Chart. File 2012 taxes late online   You must use the Depreciation Tables in Publication 946 rather than the 2013 MACRS Depreciation Chart in this publication if any one of the following four conditions applies to you. File 2012 taxes late online You file your return on a fiscal year basis. File 2012 taxes late online You file your return for a short tax year (less than 12 months). File 2012 taxes late online During the year, all of the following conditions apply. File 2012 taxes late online You placed some property in service from January through September. File 2012 taxes late online You placed some property in service from October through December. File 2012 taxes late online Your basis in the property you placed in service from October through December (excluding nonresidential real property, residential rental property, and property placed in service and disposed of in the same year) was more than 40% of your total bases in all property you placed in service during the year. File 2012 taxes late online   You placed qualified property in service on an Indian reservation. File 2012 taxes late online Depreciation in future years. File 2012 taxes late online   If you use the percentages from the chart, you generally must continue to use them for the entire recovery period of your car. File 2012 taxes late online However, you cannot continue to use the chart if your basis in your car is adjusted because of a casualty. File 2012 taxes late online In that case, for the year of the adjustment and the remaining recovery period, figure the depreciation without the chart using your adjusted basis in the car at the end of the year of the adjustment and over the remaining recovery period. File 2012 taxes late online See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. File 2012 taxes late online    In future years, do not use the chart in this edition of the publication. File 2012 taxes late online Instead, use the chart in the publication or the form instructions for those future years. File 2012 taxes late online Disposition of car during recovery period. File 2012 taxes late online   If you dispose of the car before the end of the recovery period, you are generally allowed a half year of depreciation in the year of disposition unless you purchased the car during the last quarter of a year. File 2012 taxes late online See Depreciation deduction for the year of disposition under Disposition of a Car, later, for information on how to figure the depreciation allowed in the year of disposition. File 2012 taxes late online How to use the 2013 chart. File 2012 taxes late online   To figure your depreciation deduction for 2013, find the percentage in the column of Table 4-1 based on the date that you first placed the car in service and the depreciation method that you are using. File 2012 taxes late online Multiply the unadjusted basis of your car (defined earlier) by that percentage to determine the amount of your depreciation deduction. File 2012 taxes late online If you prefer to figure your depreciation deduction without the help of the chart, see Publication 946. File 2012 taxes late online    Your deduction cannot be more than the maximum depreciation limit for cars. File 2012 taxes late online See Depreciation Limits, later. File 2012 taxes late online Example. File 2012 taxes late online Phil bought a used truck in February 2012 to use exclusively in his landscape business. File 2012 taxes late online He paid $9,200 for the truck with no trade-in. File 2012 taxes late online Phil did not claim any section 179 deduction, the truck did not qualify for the special depreciation allowance, and he chose to use the 200% DB method to get the largest depreciation deduction in the early years. File 2012 taxes late online Phil used the MACRS depreciation chart in 2012 to find his percentage. File 2012 taxes late online The unadjusted basis of his truck equals its cost because Phil used it exclusively for business. File 2012 taxes late online He multiplied the unadjusted basis of his truck, $9,200, by the percentage that applied, 20%, to figure his 2012 depreciation deduction of $1,840. File 2012 taxes late online In 2013, Phil used the truck for personal purposes when he repaired his father's cabin. File 2012 taxes late online His records show that the business use of his truck was 90% in 2013. File 2012 taxes late online Phil used Table 4-1 to find his percentage. File 2012 taxes late online Reading down the first column for the date placed in service and across to the 200% DB column, he locates his percentage, 32%. File 2012 taxes late online He multiplies the unadjusted basis of his truck, $8,280 ($9,200 cost × 90% business use), by 32% to figure his 2013 depreciation deduction of $2,650. File 2012 taxes late online Depreciation Limits There are limits on the amount you can deduct for depreciation of your car, truck, or van. File 2012 taxes late online The section 179 deduction and special depreciation allowance are treated as depreciation for purposes of the limits. File 2012 taxes late online The maximum amount you can deduct each year depends on the year you place the car in service. File 2012 taxes late online These limits are shown in the following tables. File 2012 taxes late online   Maximum Depreciation Deduction for Cars Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2012–2013 $11,1601 $5,100 $3,050 $1,875 2010–2011 11,0602 4,900 2,950 1,775 2008–2009 10,9603 4,800 2,850 1,775 2007 3,060 4,900 2,850 1,775 2006 2,960 4,800 2,850 1,775 2005 2,960 4,700 2,850 1,675 2004 10,6103 4,800 2,850 1,675 5/06/2003– 12/31/2003 10,7104 4,900 2,950 1,775 1/01/2003– 5/05/2003 7,6605 4,900 2,950 1,775 2001–2002 7,6605 4,900 2,950 1,775 2000 3,060 4,900 2,950 1,775 1$3,160 if the car is not qualified property or if you elect not to claim the special depreciation allowance. File 2012 taxes late online 2$3,060 if the car is not qualified property or if you elect not to claim the special depreciation allowance. File 2012 taxes late online 3$2,960 if the car is not qualified property or if you elect not to claim the special depreciation allowance. File 2012 taxes late online 4$7,660 if you acquired the car before 5/6/2003. File 2012 taxes late online $3,060 if the car is not qualified property or if you elect not to claim any special depreciation allowance. File 2012 taxes late online 5$3,060 if you acquired the car before 9/11/2001, the car is not qualified property, or you elect not to claim the special depreciation allowance. File 2012 taxes late online Trucks and vans. File 2012 taxes late online   For 2013, the maximum depreciation deductions for trucks and vans are generally higher than those for cars. File 2012 taxes late online A truck or van is a passenger automobile that is classified by the manufacturer as a truck or van and rated at 6,000 pounds gross vehicle weight or less. File 2012 taxes late online For trucks and vans placed in service before 2003, use the Maximum Depreciation Deduction for Cars table. File 2012 taxes late online Maximum Depreciation Deduction for Trucks and Vans Date       4th & Placed 1st 2nd 3rd Later In Service Year Year Year Years 2013 $11,3601 $5,400 $3,250 $1,975 2012 $11,3601 $5,300 $3,150 $1,875 2011 11,2601 5,200 3,150 1,875 2010 11,1601 5,100 3,050 1,875 2009 11,0601 4,900 2,950 1,775 2008 11,1601 5,100 3,050 1,875 2007 3,260 5,200 3,050 1,875 2005–2006 3,260 5,200 3,150 1,875 2004 10,9101 5,300 3,150 1,875 2003 11,0101,2 5,400 3,250 1,975 1If the special depreciation allowance does not apply or you make the election not to claim the special depreciation allowance, the first-year limit is $3,360 for 2012 and 2013, $3,260 for 2011, $3,160 for 2010, $3,060 for 2009, $3,160 for 2008, $3,260 for 2004, and $3,360 for 2003. File 2012 taxes late online 2If the truck or van was acquired before 5/06/2003, the truck or van is qualified property, and you claim the special depreciation allowance for the truck or van, the maximum deduction is $7,960. File 2012 taxes late online Car used less than full year. File 2012 taxes late online   The depreciation limits are not reduced if you use a car for less than a full year. File 2012 taxes late online This means that you do not reduce the limit when you either place a car in service or dispose of a car during the year. File 2012 taxes late online However, the depreciation limits are reduced if you do not use the car exclusively for business and investment purposes. File 2012 taxes late online See Reduction for personal use , next. File 2012 taxes late online Reduction for personal use. File 2012 taxes late online   The depreciation limits are reduced based on your percentage of personal use. File 2012 taxes late online If you use a car less than 100% in your business or work, you must determine the depreciation deduction limit by multiplying the limit amount by the percentage of business and investment use during the tax year. File 2012 taxes late online Section 179 deduction. File 2012 taxes late online   The section 179 deduction is treated as a depreciation deduction. File 2012 taxes late online If you place a car that is not a truck or van in service in 2013, use it only for business, and choose the section 179 deduction, the special depreciation allowance, and the depreciation deduction for that car for 2013 is limited to $11,160. File 2012 taxes late online Example. File 2012 taxes late online On September 4, 2013, Jack bought a used car for $10,000 and placed it in service. File 2012 taxes late online He used it 80% for his business, and he chooses to take a section 179 deduction for the car. File 2012 taxes late online The car is not qualified property for purposes of the special depreciation allowance. File 2012 taxes late online Before applying the limit, Jack figures his maximum section 179 deduction to be $8,000. File 2012 taxes late online This is the cost of his qualifying property (up to the maximum $500,000 amount) multiplied by his business use ($10,000 × 80%). File 2012 taxes late online Jack then figures that his section 179 deduction for 2013 is limited to $2,528 (80% of $3,160). File 2012 taxes late online He then figures his unadjusted basis of $5,472 (($10,000 × 80%) − $2,528) for determining his depreciation deduction. File 2012 taxes late online Jack has reached his maximum depreciation deduction for 2013. File 2012 taxes late online For 2014, Jack will use his unadjusted basis of $5,472 to figure his depreciation deduction. File 2012 taxes late online Deductions in years after the recovery period. File 2012 taxes late online   If the depreciation deductions for your car are reduced under the passenger automobile limits (discussed earlier), you will have unrecovered basis in your car at the end of the recovery period. File 2012 taxes late online If you continue to use your car for business, you can deduct that unrecovered basis (subject to depreciation limits) after the recovery period ends. File 2012 taxes late online Unrecovered basis. File 2012 taxes late online   This is your cost or other basis in the car reduced by any clean-fuel vehicle deduction (for vehicles placed in service before January 1, 2006), alternative motor vehicle credit, electric vehicle credit, gas guzzler tax, and depreciation (including any special depreciation allowance , discussed earlier, unless you elect not to claim it) and section 179 deductions that would have been allowable if you had used the car 100% for business and investment use. File 2012 taxes late online The recovery period. File 2012 taxes late online   For 5-year property, your recovery period is 6 calendar years. File 2012 taxes late online A part year's depreciation is allowed in the first calendar year, a full year's depreciation is allowed in each of the next 4 calendar years, and a part year's depreciation is allowed in the 6th calendar year. File 2012 taxes late online   Under MACRS, your recovery period is the same whether you use declining balance or straight line depreciation. File 2012 taxes late online You determine your unrecovered basis in the 7th year after you placed the car in service. File 2012 taxes late online How to treat unrecovered basis. File 2012 taxes late online   If you continue to use your car for business after the recovery period, you can claim a depreciation deduction in each succeeding tax year until you recover your basis in the car. File 2012 taxes late online The maximum amount you can deduct each year is determined by the date you placed the car in service and your business-use percentage. File 2012 taxes late online For example, no deduction is allowed for a year you use your car 100% for personal purposes. File 2012 taxes late online Example. File 2012 taxes late online In April 2007, Bob bought and placed in service a car he used exclusively in his business. File 2012 taxes late online The car cost $31,500. File 2012 taxes late online Bob did not claim a section 179 deduction or the special depreciation allowance for the car. File 2012 taxes late online He continued to use the car 100% in his business throughout the recovery period (2007 through 2012). File 2012 taxes late online For those years, Bob used the MACRS Depreciation Chart (200% declining balance method) and the Maximum Depreciation Deduction for Cars table, earlier, for the applicable tax year to compute his depreciation deductions during the recovery period. File 2012 taxes late online Bob's depreciation deductions were subject to the depreciation limits so he will have unrecovered basis at the end of the recovery period as shown in the following table. File 2012 taxes late online      MACRS     Deprec. File 2012 taxes late online Year % Amount Limit Allowed 2007 20. File 2012 taxes late online 00 $6,300 $3,060 $ 3,060 2008 32. File 2012 taxes late online 00 10,080 4,900 4,900 2009 19. File 2012 taxes late online 20 6,048 2,850 2,850 2010 11. File 2012 taxes late online 52 3,629 1,775 1,775 2011 11. File 2012 taxes late online 52 3,629 1,775 1,775 2012 5. File 2012 taxes late online 76 1,814 1,775 1,775 Total $31,500   16,135 For the correct limit, see Maximum Depreciation Deduction for Cars under “Depreciation Limits,” earlier, for the maximum amount of depreciation allowed each year. File 2012 taxes late online   At the end of 2012, Bob had an unrecovered basis in the car of $15,365 ($31,500 – $16,135). File 2012 taxes late online If Bob continued to use the car 100% for business in 2013 and later years, he can claim a depreciation deduction equal to the lesser of $1,775 or his remaining unrecovered basis. File 2012 taxes late online   If Bob's business use of the car was less than 100% during any year, his depreciation deduction would be less than the maximum amount allowable for that year. File 2012 taxes late online However, in determining his unrecovered basis in the car, he would still reduce his original basis by the maximum amount allowable as if the business use had been 100%. File 2012 taxes late online For example, if Bob had used his car 60% for business instead of 100%, his allowable depreciation deductions would have been $9,681 ($16,135 × 60%), but he still would have to reduce his basis by $16,135 to determine his unrecovered basis. File 2012 taxes late online Table 4-1. File 2012 taxes late online 2013 MACRS Depreciation Chart (Use to Figure Depreciation for 2013. File 2012 taxes late online ) If you claim actual expenses for your car, use the chart below to find the depreciation method and percentage to use for your 2013 return for cars placed in service in 2013. File 2012 taxes late online   First, using the left column, find the date you first placed the car in service in 2013. File 2012 taxes late online Then select the depreciation method and percentage from column (a), (b), or (c) following the rules explained in this chapter. File 2012 taxes late online For cars placed in service before 2013, you must use the same method you used on last year's return unless a decline in your business use requires you to change to the straight line method. File 2012 taxes late online Refer back to the MACRS Depreciation Chart for the year you placed the car in service. File 2012 taxes late online (See Car Used 50% or Less for Business . File 2012 taxes late online )  Multiply the unadjusted basis of your car by your business use percentage. File 2012 taxes late online Multiply the result by the percentage you found in the chart to find the amount of your depreciation deduction for 2013. File 2012 taxes late online (Also see Depreciation Limits . File 2012 taxes late online )   If you placed your car in service after September of any year and you placed other business property in service during the same year, you may have to use the Jan. File 2012 taxes late online 1—Sept. File 2012 taxes late online 30 percentage instead of the Oct. File 2012 taxes late online 1—Dec. File 2012 taxes late online 31 percentage for your car. File 2012 taxes late online               To find out if this applies to you, determine: 1) the basis of all business property you placed in service after September of that year and 2) the basis of all business property you placed in service during that entire year. File 2012 taxes late online If the basis of the property placed in service after September is not more than 40% of the basis of all property (certain property is excluded) placed in service for the entire year, use the percentage for Jan. File 2012 taxes late online 1—Sept. File 2012 taxes late online 30 for figuring depreciation for your car. File 2012 taxes late online See Which Convention Applies? in chapter 4 of Publication 946 for more details. File 2012 taxes late online               Example. File 2012 taxes late online You buy machinery (basis of $32,000) in May 2013 and a new van (basis of $20,000) in October 2013, both used 100% in your business. File 2012 taxes late online You