Damage to Business Car

[Kram BergGold]

My client typically claims IRS mileage Allowance method. She just had an accident and the repair costs will be about $2,000 (she does not want to use insurance as the surcharges etc will be too high). Can this be claimed on Form 4868 for the business percentage of the use of car (the personal percentage will be way below 10% of her income) in addition to mileage or does she have to use actual expenses to claim a casualty loss?

[WhiteOleander]

I think if you have insurance and don't file a claim, you cannot claim a casualty loss.

So, she might be out of luck.

[geekgirldany]

If it was covered by insurance then filing insurance claim is a prerequisite to the deduction. But the portion of the loss not covered by insurance like the deductible is not subject to the rule.

[Jiggers]

Form 4868?

Why would you use Form 4868, the extension form, for this?

[Luis Mopeo]

Repairs are built in to the standard mileage allowance. She can't take repairs unless actual expenses have been used.

[Jiggers]

Repairs included in standard mileage

Repairs are built in to the standard mileage allowance. She can't take repairs unless actual expenses have been used.

I agree with Luis. Repairs are included in the standard mileage rate. You can't take repairs unless you use actual.

[Bees Knees]

A taxpayer can always switch from he standard mileage rate to actual expenses in a later year. TTB, page 10-5 under depreciation says: "The standard mileage rate includes an allowance for depreciation. If the actual expense method is used in a later year, but before the car is fully depreciated, estimate the remaining useful life of the car and use straight line depreciation..."

So for example, you have been using the standard mileage rate for the first three years. Then in year four, you have an accident with a large repair bill. Taking actual expenses in year four is better than standard mileage, so you switch to actual expenses in year four, including the repair costs in actual expenses. You estimate the car will have 4 more years of useful life, so your depreciation deduction in year four is based on the original cost, minus the depreciation component of the standard mileage rate for years 1-3, divided by 4.

[solomon]

If Actual Expenses

were used and an insurance claim was not filed, per Pub 547 the deductible can still be used as a loss. This was even a question on one of the past SEE's and the correct answer affirmed the prior statement.