How do I determine the useful life of my business vehicle?
The useful life period starts when you actually use the vehicle for business. Use these 3 major factors to figure your useful-life depreciation deduction:
Basis of the vehicle to be depreciated – This is usually the cost of the vehicle.
Salvage value – This is the residual value that the vehicle is estimated to have when you retire it.
Depreciation period – This is the time period when you claim the deductions. To figure your depreciation period, choose between these 2 systems:
Useful life system – Under this system, the depreciation period is the actual life of the vehicle for you. This is based on your own use of the vehicle and your facts and circumstances.
Class life asset depreciation range system – Under this system, you choose a depreciation period from a set of ranges. The IRS creates the ranges for various classes of depreciable assets. The depreciation period assigned to each class shows the vehicle's useful life for that particular industry.
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This advice is for general information purposes only and may not apply to you. Every tax situation is different. This is not intended to be legal advice. Taxpayers should consult an H&R Block Tax Professional regarding their individual tax situation.