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New Truck Depreciation Schedule

Discussion in 'Trucker Taxes and Truck Financing' started by Hegemeister, Apr 15, 2017.

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  1. Apr 15, 2017 #1
    Hegemeister

    Hegemeister Road Train Member

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    Mechanicsburg, PA
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    Hello all.
    I purchased a new truck in 2015. Last year, my accountant used a depreciation amount of $40,000. I didn't question it too much, seemed a little high, but OK.
    For 2016, I am told that I am required to depreciate the truck by about $75,000. What???? Required? His explanation was since we took the 40k the first year we have to follow some Kenworth schedule.
    Then he tells me I'll get about 18k next year and then about 12k the following year.

    This info is all new to me and does not make any sense. In reality, the truck depreciates the most the first year then less the second year and so on.

    For 2016, I'll be showing a loss with per diem and other purchases I made.

    Can anyone comment? I would love to lower the amount for 2016 and save some depreciation for the next couple of years.

    At this rate I'll be making payments in a couple of years with high principle and no deduction to offset.

    Thanks.
     
    Hegemeister, Apr 15, 2017
    Hegemeister, Apr 15, 2017
    #1
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  3. Apr 15, 2017 #2
    KB3MMX

    KB3MMX Road Train Member

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    IRS sets the schedule not Kenworth....., it's three years for road tractors..... Reference the IRS on how to use the schedule though
     
    KB3MMX, Apr 15, 2017
    KB3MMX, Apr 15, 2017
    #2
    Hegemeister Thanks this.
  4. Apr 15, 2017 #3
    mnmover

    mnmover Road Train Member

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    You have a choice, depreciate it all in one year, not advised or use the IRS schedule, 3 years for a highway tractor. The one year is a schedule 79 or something.
     
    mnmover, Apr 15, 2017
    mnmover, Apr 15, 2017
    #3
  5. Apr 15, 2017 #4
    Hegemeister

    Hegemeister Road Train Member

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    3 years can be rough when you are on a 5 year loan.
    But does the 40k year one and 75k year two seem right?
     
    Hegemeister, Apr 15, 2017
    Hegemeister, Apr 15, 2017
    #4
  7. Apr 16, 2017 #5
    KB3MMX

    KB3MMX Road Train Member

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    Yes, first year is usually a partial on the three year...

    And I agree the three year is crazy with newer trucks allot finance for five years.....

    Maybe after we get some other major issues sorted out in trucking they can fix things like that.. wishful thinking right
     
    KB3MMX, Apr 16, 2017
    KB3MMX, Apr 16, 2017
    #5
    Cowboyrich and Hegemeister Thank this.
  8. Apr 16, 2017 #6
    BigTennOTR

    BigTennOTR Medium Load Member

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    What would your 3rd year be?? Another 40k?
     
    BigTennOTR, Apr 16, 2017
    BigTennOTR, Apr 16, 2017
    #6
    Cowboyrich Thanks this.
  9. Apr 16, 2017 #7
    Hegemeister

    Hegemeister Road Train Member

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    Mechanicsburg, PA
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    He told me the 3rd year would be $18k and the 4th around $12k. Would love to understand the logic. I always thought I would have some flexibility. Unfortunately, I made some major equipment investments in 2016 and it seems I'll be showing a loss, which is good for this year, but he said the loss has to be spread out over the next 5 years. 75k one year depreciation and 18k the next???? Crazy.

    I told him well, I'll just trade the truck in for a new one and start over. He said then I would have to pay tax on the trade in value.

    I just feel like I was boxed in.
     
    Hegemeister, Apr 16, 2017
    Hegemeister, Apr 16, 2017
    #7
  10. Apr 16, 2017 #8
    Cat sdp

    Cat sdp . .

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    I'm pretty sure we can't carry a loss over like the uber rich corporations..,,.. what ever loss you have for this year just goes away...:(
     
    Cat sdp, Apr 16, 2017
    Cat sdp, Apr 16, 2017
    #8
  11. Apr 17, 2017 #9
    mtoo

    mtoo Road Train Member

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    like has been said it's a 3 year property, since you didn't buy it jan 1. your tax man used some type of mid year convention. Your depreciation schedule will look something like one of these. Study up on the Section 179 code, it will come in handy but it's something you want to be smart about.

    Year 1 33.33% of the basis based on half year convention
    Year 2 44.45% of the basis
    Year 3 14.81% of the basis
    Year 4 7.41% of the basis based on half year convention

    Year 1 58.33% of basis based on Mid quarter convention placed in service 1st qtr
    Year 2 27.78% of basis
    Year 3 12.35% of basis
    Year 4 1.54% of basis based on Mid quarter convention

    Year 1 41.67% of basis based on Mid quarter convention placed in service 2nd qtr
    Year 2 38.89% of basis
    Year 3 14.14 % of basis
    Year 4 5.30% of basis based on Mid quarter convention

    Year 1 25.00% of basis based on Mid quarter convention placed in service 3rd qtr
    Year 2 50.00% of basis
    Year 3 16.67 % of basis
    Year 4 8.33% of basis based on Mid quarter convention

    Year 1 8.88% of basis based on Mid quarter convention placed in service 4th qtr
    Year 1 61.11% of basis
    Year 3 20.37% of basis
    Year 4 10.19% of basis based on Mid quarter convention
     
    mtoo, Apr 17, 2017
    mtoo, Apr 17, 2017
    #9
    RubyEagle, Hegemeister and BigTennOTR Thank this.
  12. Apr 17, 2017 #10
    Hegemeister

    Hegemeister Road Train Member

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    Jun 16, 2012
    Mechanicsburg, PA
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    Wow. Thank you for taking the time. Sometimes it's really hard to find logic in government law. Common sense goes out the window.

    Thanks again!!!
     
    Hegemeister, Apr 17, 2017
    Hegemeister, Apr 17, 2017
    #10
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