Standard Mileage Rate

[Black Bart]

Switching to actual in second year. I understand MACRS (including ADS) is out, but then what?

ACRS?

Pre-1981 SL? Exhume this body and press it back into service? Doesn't seem quite right. Didn't see anything in the Pub.

[Unregistered]

Bart

From Pub 463

Generally, you figure depreciation on cars using the Modified Accelerated Cost Recovery System (MACRS). MACRS is discussed later in this chapter.

Exception.

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. You must use straight line depreciation over the estimated remaining useful life of the car.

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. The rate per mile varies depending on the year(s) you used the standard mileage rate. For the rate(s) to use, see Depreciation adjustment when you used the standard mileage rate under Disposition of a Car, later.

New York Enrolled Agent

[Black Bart]

Straight Line

Yeah, thanks. I know MACRS is out of the picture and that basis needs to be reduced, but what I was getting at is this: Is there any difference at all in the calculation of SL before ACRS and during ACRS?

[Bees Knees]

You might check out this thread. I'm not sure if that is what you are asking, but see if it helps any.

http://www.thetaxbook.com/forums/showthread.php?t=215&highlight=Straight+Line

[Black Bart]

Your answer's right as rain, Bees (use "old" pre-1981 SL).

You might check out this thread. I'm not sure if that is what you are asking, but see if it helps any.

http://www.thetaxbook.com/forums/sho...=Straight+Line

The link you posted gives the 100% exact, right-on-the-money answer to my question, which is: For the second year; I need to use the "old" pre-1981 straight-line depreciation method, which was later replaced by an ACRS "style" SL method which, in turn, was later replaced by the MACRS system.

Thank you very much, Bees. Your link leads to a wonderfully detailed, complete, and exhaustively thorough examination and explanation of my problem -- plus any and all related questions which might conceivably arise from the discussion of it.
Also, that link leads to a 2005 thread in which abby comments that your answer is exactly the kind of thing which prompts practitioners to buy The Tax Book, hook-up with TMI, and get on this board. I couldn't agree more.

I've looked in tax books, listened to well-read seminar speakers, and searched far-and-wide for answers to "off-beat" questions. To a large extent (as you pointed out in the link), those answers do not exist. You can look in all the refs you want -- it won't be there. You can talk to IRS 'til the cows come home -- they won't know and will treat you as a "nut" if you push it. Usually you're left to take your best guess and "wing-it." But...here it is: the right and relevant answer given by one who knows, cares, has encountered the question himself, examined it to the nth degree, and rendered a definitive answer. . Sorry if I'm gushing, but, generally speaking, you can't get answers like that for love nor money.

This kind of problem is one to which only a practicing tax preparer could relate. I can see now why you and your colleagues, as a matter of principle I assume, refused to give up your individual practices which were the key to the whole concept of furnishing relevant advice to other working practitioners. I''d be willing to bet that it won't be very long until QF realizes that they "threw out the baby with the bathwater" when they demanded you stop practicing your trade.

Again, thank you very much.

[Bees Knees]

Please don't puff up my head toooo big, I'm having trouble getting through the door....

I like to point people to the chart on page 3-16, Single Parent Situations for 2005. The rules are re-gurgitated nicely on pages 3-14 and 3-15 which is basically a repeat of IRS Pubs and instructions. But page 3-16 is the result of practicing professionals trying to solve every day questions we encounter in our practices. You won't find that kind of thing in an IRS Pub, unless of course they copy us....which they have been known to do many times in the past. I'm not trying to brag or anything...it is just a matter of fact. Many things we do as tax professionals cannot be answered in rule books or text books written by outsiders. Even if you practiced at one time, within a few years, you will lose it if you don't keep using it. And how can someone who hasn't practiced as a CPA in 10 years understand the practical application of the new rules that have been passed into law since.

An example is the Hope Scholarship and Lifetime Learning credits. I remember studying those rules and studying for the summer and fall after they were passed to get ready for the next tax season. After all that, when tax season finally hit, even though I thought I had hit every possible angle to the rules, wouldn't you know it but my clients immediately starting asking questions from angles I had yet to consider. There is no substitute for practical experience. The day I stop practicing as a tax professional is the day I stop giving any advice on how to do taxes. I am surprised others do not feel that way, and think they can just continue to teach, or lecture at seminars, or write articles for magazine journals and publications.