Depreciable basis

[MichaelG]

A sole-proprietor is starting a business Feb 1, 2012. In January 2012 they received a used truck as a gift. The truck, which will be used exclusively for the new business, had a FMV of $2300 when gifted. (It was sold to the gift giver at that price just days before it was gifted.)

It seems that this is property converted from personal use (the title is in the name of the individual) with depreciable basis of $2,300.

Agree or dis-agree?

[MilTaxEA]

Lesser of fair market value or the donor's basis. In this case it is probably reasonable to assume the donor's basis was greater than $2,300 (doesn't hurt to check though), so I would go with the $2,300.

However, with such an inexpensive vehicle I would probably use the standard mileage rate (SMR) for at least the first year. Then you can switch between the actual expenses and SMR in future years depending on which gives the better deduction in that year. Plus, you can keep using the full SMR even after you've fully depreciated the truck.