Remember that if you take the IRS mileage rate on an auto in your business, you still have to claim a gain or loss if you sell that car or truck. The IRS mileage rate includes 22 cents a mile depreciation, so use that and your total miles to calculate how much depreciation to reduce your cost and calculate your gain or loss. If you have questions, email me at bstonercpa@sbcglobal.net and we can do a calculation to see whether it makes sense to sell, trade in or give away the car or truck.
Brian’s Tax Musings
Yesterday I told you about actual auto expenses vs the IRS mileage rate as a business deduction. Just remember, using either method still requires you to have an auto mileage log to prove your business miles. So make sure you keep a mileage log, or the IRS can change or disallow your business miles and reduce or eliminate your deduction for auto expense. Email me at bstonercpa@sbcglobal. to ask me about this log and what you need to substantiate your business miles.
Brian’s Tax Musings
If you take the IRS mileage rate of 51 cents per mile for Jan – June and 55.5 cents per mile for July – December, you may be losing some deductions. Especially if this is on a new car, you need to run a calculation to determine if the actual expenses will give you a larger deduction vs the mileage rate. Take your expenses, add depreciation, then take the percentage of business use as a percentage and multiply. Take the higher of the two. One thing to remember if you take accelerated depreciation you are not allowed to take the mileage rate anymore, so if the deductions are close, you may want to take the mileage to allow you to take the mileage rate in the future.If you have questions, you can email me at bstonercpa@sbcglobal.net