# If you buy a car to drive Uber, can you count that as a "start-up cost?"



## deadeye (Jul 13, 2016)

I'm all but certain the answer is no, so I guess my real question is, why not? RideShareGuy's accountant/consultant gives an example of a legitimate, deductible start-up cost as needing to buy new tires to pass Uber's inspection (sorry can't post link). Wondering what's the difference between that and having to buy a vehicle.


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## tohunt4me (Nov 23, 2015)

Do not invest anything beyond time in UBER. Only invest time if you have a surplus and no other outlet for your time.


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## UberAnt39 (Jun 1, 2016)

Talk to an actual accountant. There's a reason they charge $200/hr.


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## NWO_Watcher (Apr 7, 2016)

I would deduct the cost of the vehicle, and may even go so far as to lend myself the money to buy it, calculating for a complete loss for this venture.


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## UberAnt39 (Jun 1, 2016)

A car owned by the business qualifies for accelerated depreciation and various tax benefits, as long as you keep it 5 years, but the IRS mileage rate probably covers that. It's a good reason to ask an actual accountant.


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## elelegido (Sep 24, 2014)

deadeye said:


> I'm all but certain the answer is no, so I guess my real question is, why not? RideShareGuy's accountant/consultant gives an example of a legitimate, deductible start-up cost as needing to buy new tires to pass Uber's inspection (sorry can't post link). Wondering what's the difference between that and having to buy a vehicle.


The answer is no. You can't deduct the purchase amount paid for the car as a cost, "startup" or otherwise. The reason is that all you are doing when buying a car is converting one asset (cash) into another asset (vehicle); you are not incurring a cost. If you have $10,000 in the bank and use it to buy a car, you will still have $10,000 book value in assets.

The decrease in value of the vehicle asset (depreciation) is a deductible cost, however.


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## Alice Arifova (Dec 9, 2016)

I think Do not invest anything beyond time in *uber* . Only invest time if you have a surplus and no other outlet for your time.


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## deadeye (Jul 13, 2016)

elelegido said:


> The answer is no. You can't deduct the purchase amount paid for the car as a cost, "startup" or otherwise. The reason is that all you are doing when buying a car is converting one asset (cash) into another asset (vehicle); you are not incurring a cost. If you have $10,000 in the bank and use it to buy a car, you will still have $10,000 book value in assets.
> 
> The decrease in value of the vehicle asset (depreciation) is a deductible cost, however.


Thank you for your thoughtful, informative reply! Much appreciated


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## UberTaxPro (Oct 3, 2014)

deadeye said:


> Thank you for your thoughtful, informative reply! Much appreciated


There is one way to deduct the purchase amount paid for the vehicle in the first year. It's a Section 179 deduction. There are some qualifying rules but a vehicle used to transport passengers for hire and used at least 50% for business would qualify.


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## elelegido (Sep 24, 2014)

UberTaxPro said:


> There is one way to deduct the purchase amount paid for the vehicle in the first year. It's a Section 179 deduction. There are some qualifying rules but a vehicle used to transport passengers for hire and used at least 50% for business would qualify.


Companies/proprietors only qualify for the section 179 vehicle deduction if they've been in business for the last two years.


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## UberTaxPro (Oct 3, 2014)

elelegido said:


> Companies/proprietors only qualify for the section 179 vehicle deduction if they've been in business for the last two years.


There are other qualifying rules but I can't find that one in the IRC. Do you have a reference?


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## UberTaxPro (Oct 3, 2014)

elelegido said:


> Companies/proprietors only qualify for the section 179 vehicle deduction if they've been in business for the last two years.


You do not have to be in business for two years to claim any section 179 deduction.


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