I have a question about a person closing there Sch C, they are a sole proprietor and they have one vehicle for the business using standard mileage deduction. When I close the schedule C do I need to recapture any of the prior depreciation on the vehicle? It was more than 50% business use and now will be converted to personal use (they are not selling or disposing of the vehicle) I'm sure this is simple but I am just have a moment and can't think it out myself. Thank you.
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There is no need to do anything until it is sold (or otherwise disposed of). -
No recapture is required. That's because the depreciation element of the SMR only applied to the business use in each of the years it was taken.
The owner should, however, reduce the vehicle's basis by the depreciation portion of all the business miles used when figuring the SMR. This is explained in IRS Pub 463. The annual depreciation rates, per business mile, may be found on page 25 of that Pub.Roland Slugg
"I do what I can."Comment
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Thank you
Ok, so when or if they ever do dispose of this vehicle the Sch C will be closed. Where would this get reported? Also, do I have to make note of this when I prepare the final sch C? The basis of this vehicle in 2011 was only $1300 as of right now it's below zero with rate of depreciation allowed in SMR.Comment
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Thank you
Ok I will look at the pub. I reduced the basic and it is actually below zero so does this need to be reported or notated anywhere on the final sch c?
Thank you so much!Comment
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