Cab-Depreciation

[Bird Legs]

Client purchased a 2001 vehicle in October, 2005 to operate a cab through a cab co.
Did not want to get the car through the cab co. because of the higher cost.
He pays commissions etc. to the cab co. plus all the operating expenses of the car.
Question: I set this car up on a 5 yr. life for deprn.
Client says that a vehicle that old should be depreciated over a 3 yr. life.
This is what the cab co. told him.
Do any of you know what life a cab should be depreciated over?
Your help is greatly appreciated.

[jainen]

all taxpayers

>>a vehicle that old<<

With MACRS, you don't use the expected life of the individual piece of equipment. You use the class life, which is standardized for all taxpayers.

[S T]

Taxi

If you look at the Chart in The Tax Book on page 9-8, under 5 Year Property a)Autos, taxis, buses, and trucks are listed. Also page 9-10 Asset class 00.22 MACRS - 5

Sandy

[Gene V]

Since a taxicab falls under the Special Use Vehicles classification, and is exempts from the Sec. 280F limitations. Why can’t you take enough Sec.179 the first year to make up for the 5 years of depreciation? Since it is exempt from the “passenger auto” definition, I don’t see why you can’t use 3 years.
Just something to think about.

[Snaggletooth]

5-year

S T says the life for cabs are standardized at 5 years. I have heard this 3-year stuff before for vehicles with a proclivity for long mileage, but have never seen it confirmed.

If your client is in the business for the long haul, he might do better to just accept the 5 year life anyway. It results in a stable income position from year-to-year, and provides additional basis for vehicles which are traded in. I know most clients are hungry for cash but I try to stop them from burning all the candle early and resulting in big spikes in their annual reporting.

[Bird Legs]

Thanks

to all of you for your response and your valuable time.
Appreciate all of you.
Snag, the client really does not need the 179.
By the way, Snag, heard an old song on the radio this AM titled " Thunder Road".
All about them Tennessee moonshiners and racing their souped up cars around those
mountains, trying to outrun the sheriff..

[thomtax]

Oldie

You must be listening to a really oldie station. That song is at least 40 years old. There was also a movie made about it. Robert Mitchum was the one the song was about. I saw it on TV about a week ago.

LT

[Snaggletooth]

Moonshining

...ah, yes, a part of our noble past. Very prolific from its beginning, when poor transportation systems in the mountains could not economically bring a corn crop to market but could support a much more condensed version of the corn.

Proverbial chases involving the local sheriff were almost non-existent. They were on the take, and the big chases involved the "Revenooers" from the State and from the US Treasury. The locals knew every hill and every curve in the road, and the revenooers just couldn't chase and keep up with them.

Moonshining was work. When I was growing up, we all knew where the moonshiners were, and they didn't mind you on their land if they knew you. I don't know where to find any these days - nowadays they all grow pot. Easier work and broader market.

Tennessee was famous, but the real hot spots for moonshine were North Georgia and the Southern tip of Illinois. The region of Illinois was called "Egypt" during the Prohibition, hence the naming of its southernmost city, Cairo.

[Joe Btfsplk]

Taxi Depreciation

See page 9-9 TTB, Class 00.22 Automobiles and taxis are depreciated over 5 years.
Tractor units for OTR use have a 3 year life.