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    Sales Tax on Car

    Client has a business operated out of home. Purchased a new car in August, 2005 used about 40% of time for business. Total cost of car including sales tax is 23,276.
    The sales tax is $1,356.
    How would you allocate the sales tax between Sched. A, itemized deductions, and cost of car for business purposes?
    Thanks again.

    #2
    Reduce basis

    Reduce basis by the amount of any deduction taken on Schedule A. It might be best to claim 100% there.

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      #3
      Originally posted by Bird Legs
      Client has a business operated out of home. Purchased a new car in August, 2005 used about 40% of time for business. Total cost of car including sales tax is 23,276.
      The sales tax is $1,356.
      How would you allocate the sales tax between Sched. A, itemized deductions, and cost of car for business purposes?
      Thanks again.

      how about 40% to capital asset ($542.4) and 60% to sch a ($813.6) . This is assuming you want to capitalize the vehicle rather than mileage. Just my 2 cents

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        #4
        Jainen-Sea Tax

        Thanks for your response. Very much appreciated.

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