Major Repair to OTR Truck

[Safire]

Major repair to OTR truck that was in a wreck, 38k to replace the cab. Seems I recall reading somewhere that if the repair was to bring the equipment back into working order that I could expense it rather than capitalize it.

Would be hard to drive an OTR truck without the cab.

Opinions?

Thanks in advance.

[Armando Beaujolais]

Major repair to OTR truck that was in a wreck, 38k to replace the cab. Seems I recall reading somewhere that if the repair was to bring the equipment back into working order that I could expense it rather than capitalize it.

Would be hard to drive an OTR truck without the cab.

Opinions?

Thanks in advance.

Seems to me you have something more like a casualty loss. Generally deductible, up to the truck's basis or reduction in FMV, whichever is less. See TTB, page 8-6.

[Jesse]

Major repair to OTR truck that was in a wreck, 38k to replace the cab. Seems I recall reading somewhere that if the repair was to bring the equipment back into working order that I could expense it rather than capitalize it.

Would be hard to drive an OTR truck without the cab.

Opinions?

Thanks in advance.

If you have not used up the $105,000 limit you can capitalize and take the section 179 deduction and have the same end result as expensing. Might not work for the state deduction depending on the State Section 179 limits.

[Safire]

Thanks

Thanks Jesse, trouble is we will need more than 105k to get us where he needs to be for taxes.

Was hoping that if I could expense the repair, that would put us right where we needed to be with the other 105k still available.

Will look into the casualty loss side of it, he did get some insurance reimbursemt, which we already have classified as income.

One other part of the problem, was this happened very late in 2004, so part of the repairs didn't happen until early 05, and that's also when he got the money from insurance.

Would I have had to take the casualty loss on 2004 return?