If you 50% depreciate a car and do not drive the next year do how have to return the depreciation?
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Yes. And this has nothing in particular to do with Uber, it applies to any business-use auto.
From TheTaxBook:
"Business use drops to 50% or less. The Section 179 deduction, special deprecation allowance, and MACRS 200DB depreciation must be recaptured if, during the recovery period, the business use of the vehicle drops to 50% or less. The recaptured amount is the excess of the Section 179 deduction, special depreciation allowance, and 200DB depreciation versus what would have been allowed had straight-line depreciation been claimed for every year.
Self-employment tax on depreciation recapture. The amount of depreciation recaptured because business use of a vehicle dropped to 50% or less must be reported as ordinary income, and is also subject to self-employment tax. This depreciation recapture is reported on Part IV of Form 4797."
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I am reading your question differently than Rapid Robert. If in year one the car was used 50% for business then by law SL depreciation would have been used. If in year 2 the car was used even less there would be no recapture to report. There is only recapture if section 179 is used or accelerated depreciation is used.Comment
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Good point. At first glance I thought it just meant that half the unadjusted basis of the car had already been deducted as a depreciation expense, and I assumed accelerated depreciation (because otherwise, why wouldn't one just use standard mileage?) We need clarification on what "you 50% depreciate a car" means.Originally posted by Kram BergGold View Post
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