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If a vehicle is given to me by my parents, am I allowed to depreciate it for tax purposes?

Section 1015(a). This section states, in pertinent part, that for property acquired by gift, "the basis shall be the same as it would be in the hands of the donor...except that if such basis is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value." source

That seems to indicate that you can in fact depreciate a vehicle given to you?

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That seems to indicate that you can in fact depreciate a vehicle given to you?

Section 1015 discusses the calculation of basis for gifted property, it says nothing about depreciation.

Personal property cannot be depreciated for tax purposes unless it is used for business purposes. So unless you drive your car as part of your sole-proprietor business, you cannot depreciate it, be it a gift or a car you purchased yourself.

If you can depreciate the car, then sec. 1015 is used to calculate the basis for the depreciation.

  • I would, I figured that was understood. It will be my primary driver 75% of drive time will be for business use. – Evan Carroll Aug 8 '13 at 8:33
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    So the section doesn't say that you can depreciate it, it says that if you can - that's how to calculate the basis. – littleadv Aug 8 '13 at 8:34
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Yes, you can depreciate gifts to your business subject to the special rules in § 1011 and Regulation § 1.1011–1 and 1.167(g)–1. It is dual basis property so when you sell the item your gain/loss basis will be different. Adjusted basis of the donor for gain, FMV on the date received for the loss. Minus any depreciation you add, of course, in both cases.

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