# Car purchased for transporting FOR HIRE can't be depreciated?



## Michael - Cleveland (Jan 1, 2015)

Any tax pros care to comment on this?

The section describing DEPRECIATION in IRS Publication 463 (Travel, Entertainment, Car Expenses) states:

*Car defined. *
For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its unloaded gross vehicle weight must not be more than 6,000 pounds. A car includes any part, component, or other item physically attached to it or usually included in the purchase price. *A car doesn't include:*

An ambulance, hearse, or combination ambulance-hearse used directly in a business,
*A vehicle used directly in the business of transporting persons or property for pay or hire*, or
A truck or van that is a qualified nonpersonal use vehicle.


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## SEAL Team 5 (Dec 19, 2015)

Michael - Cleveland said:


> Any tax pros care to comment on this?
> 
> The section describing DEPRECIATION in IRS Publication 463 (Travel, Entertainment, Car Expenses) states:
> 
> ...


Right, as long as the vehicle was purchased for business use only and not personal use. Just deduct the purchasing price over the period of time you have the vehicle. You have to itemize all vehicle expenses and not use the standard IRS mileage deduction. I'm not 100% sure about this, but if you deduct the vehicle over a 5 year span you can actually deduct 150% of the purchase price. Consult a CPA about this. We flip our vehicles every 3 years so I've never had the 5 year deduction.


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## Trafficat (Dec 19, 2016)

So why do so many people talk about using the standard mileage deduction for their Uber business miles? Are they just ignorant of the tax code?


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## LAuberX (Jun 3, 2014)

Trafficat said:


> So why do so many people talk about using the standard mileage deduction for their Uber business miles? Are they just ignorant of the tax code?


The standard mileage deduction and depreciation of an asset are two different things. You can do one or the other.

the standard mileage deduction is best for most UberX drivers, you will end up with little to no profit after using it.


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## Michael - Cleveland (Jan 1, 2015)

SEAL Team 5 said:


> Right, as long as the vehicle was purchased for business use only and not personal use. Just deduct the purchasing price over the period of time you have the vehicle. You have to itemize all vehicle expenses and not use the standard IRS mileage deduction. I'm not 100% sure about this, but if you deduct the vehicle over a 5 year span you can actually deduct 150% of the purchase price. Consult a CPA about this. We flip our vehicles every 3 years so I've never had the 5 year deduction.


But that's my question - according to the definition I cited, you can't DEPRECIATE a vehicle that is purchased for business use if the car is "*A vehicle used directly in the business of transporting persons or property for pay or hire"
*
I don't think it's a big deal to me personally because I purchase inexpensive vehicles to use for Uber and use the std mileage deduction (because I come out ahead that way). But I could see this being an issue for someone who buys an $80,000+ vehicle for use as a private VFH, Uber black and Select and drives relatively few miles.


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## UberTaxPro (Oct 3, 2014)

Michael - Cleveland said:


> But that's my question - according to the definition I cited, you can't DEPRECIATE a vehicle that is purchased for business use if the car is "*A vehicle used directly in the business of transporting persons or property for pay or hire"
> *
> I don't think it's a big deal to me personally because I purchase inexpensive vehicles to use for Uber and use the std mileage deduction (because I come out ahead that way). But I could see this being an issue for someone who buys an $80,000+ vehicle for use as a private VFH, Uber black and Select and drives relatively few miles.


It doesn't say you can't depreciate it. It just states that you can't call it a "car". Check out publication 946 on page 31, it lists automobiles(not cars), taxis, buses and trucks as 5 year property under GDS.


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## Amsoil Uber Connect (Jan 14, 2015)

Just like the phrase, "From whatever source derived" Income. No one ever asks for the list of "Sources"


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## shiftydrake (Dec 12, 2015)

Ok that's why I love TurboTax they ask questions t answer them they put it where it goes on whatever forms.......easy peasy quick and greasy.......did mine on 2/3 getting almost 5k from federal and 1280 from state


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> It doesn't say you can't depreciate it. It just states that you can't call it a "car". Check out publication 946 on page 31, it lists automobiles(not cars), taxis, buses and trucks as 5 year property under GDS.


Yes - I saw that (GDS list) - that's why the confusion - and the question.

The paragraph/definition is under the section for depreciation - and it says:
"*Car defined. *
For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets..."​It doesn't say '...any four-wheeled vehicle (including a truck or van _or automobile_)...'
What a bizarre paragraph. I don't understand its purpose.
If what you're saying is correct, what the hell is that definition all about and why does IRS care what you call a 'car'?


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## shiftydrake (Dec 12, 2015)

I write ALL of my miles off every year cuz it's a commercial vehicle used explicitly for transporting paying pax.......I also have a personal car that is separate and I don't do personal miles in my taxi.........I wrote off/claimed dang near 40k miles last year


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## UberTaxPro (Oct 3, 2014)

Michael - Cleveland said:


> Yes - I saw that (GDS list) - that's why the confusion - and the question.
> 
> The paragraph/definition is under the section for depreciation - and it says:
> "*Car defined. *
> ...


Bizarre is a good adjective to describe the whole IRS! Interestingly the IRS has a "Hierarchy of Tax Authorities"  that can be used for administrative guidance. Publications like 463 do not make the IRS's own list of tax authorities. In other words when your in a administrative dispute with the IRS if you quote one of their own publications like 463 it won't carry much weight towards proving your argument. Here's a list of the top 7 tax authorities from the IRS. https://www.irs.gov/uac/understanding-irs-guidance-a-brief-primer There are actual cases where a taxpayer has tried to prove his/her point quoting an IRS publication like 463 and the IRS has ruled against its own publication.


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## Michael - Cleveland (Jan 1, 2015)

UberTaxPro said:


> There are actual cases where a taxpayer has tried to prove his/her point quoting an IRS publication like 463 and the IRS has ruled against its own publication.


So that's where Uber got it's administrative handbook!


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## Older Chauffeur (Oct 16, 2014)

shiftydrake said:


> Ok that's why I love TurboTax they ask questions t answer them they put it where it goes on whatever forms.......easy peasy quick and greasy.......did mine on 2/3 getting almost 5k from federal and 1280 from state


Comparing refunds is apples and oranges. Everyone's tax situation is different, and a large refund means you gave the government an interest-free loan for most of the year. What counts is the bottom line of what you're actually paying in taxes and how much of your income you manage to keep.

If you're paying estimated quarterly payments, you might want to adjust or eliminate them if your tax obligation is less than $1000. If you have a spouse whose witholding is setting you up for the refund, adjustments can be made to reduce the amounts being paid in by changing the number of dependents claimed.

OTOH, if you like a big chunk of your own money coming to you from forced savings, that's certainly your prerogative.


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