62

My mother worked for one of the major American car rental companies. She talked about this topic with me and my answer will summarize the talk. Does the fact that they sell the car mean during this time suggest that they know the car's cost of further maintenance or other costs will be higher? Or is there another reason they sell at this time which, ...


44

Many Web sites and articles warn against buying former rental cars, because people renting these cars often mistreat them. Rental cars are typically driven by people over 25, these are typically people with some financial means (air travel, credit card). Additionally, rental cars are subject to frequent inspection and likely to be on tighter maintenance ...


28

IRS Pub 561 says you have to use fair market value. You cannot simply use a depreciated value. You should attempt to determine what people normally pay for comparable items, and be prepared to defend your determination with evidence in the event of an audit.


19

Many Web sites and articles warn against buying former rental cars, because people renting these cars often mistreat them. Many of those are also written by unqualified individuals for publication on blog farms and encourage all sorts of odious financial practices. That's not even considering the interests of who is paying to advertise on said blogs-- I'm ...


16

The usual lazy recommendation: See what similar objects, in similar condition, of similar age, have sold for recently on eBay. That establishes a fair market value by directly polling the market.


13

Electric bikes are a newish thing, and with it you can expect technology to improve. Considering that, the tech in your current bike, even if new might be considered antiquated in 3 to 5 years. Also you might consider the weather. Bikes need maintenance, and are sensitive to the elements. Without riding it, and being outside in a shed, the machinery ...


11

Re: "Real estate usually goes up in value" ... yes, the land, primarily. There's a difference between a building, and the land it is built on. A building won't last forever. Since it doesn't last forever, at some point it will need to be replaced. Depreciation is the accounting & taxation way of recognizing the decreasing value of the asset — ...


10

It depends completely on the car. Some cars retain their value much better, and others drop in value like a rock (no pun intended). The mileage and condition on a car also has a huge impact on value. According to this site, cars on average lose 46% of their value in three years, so seeing one that drops 62% in roughly 3 years does not seem impossible. ...


6

Is it a tube television, digital, analog, what? Tube televisions are no longer made in (or imported to) the U.S., and if it's an analog set then it would require a digital converter just for anyone to use it for watching broadcast signals, since analog television signals are gone and have been replaced by DTV. That makes all the difference in the world as ...


6

In Canada, you have the option of claiming depreciation expense, called capital cost allowance (CCA), it is not required. At time of sale, any CCA that you have claimed is recaptured and taxed as regular income (so long as sale price is >= to your original purchase price). If you elected not to claim CCA, you are not subject to recapture. So you missed out ...


6

I've been told by staff in my local car hire agency that they get such big discounts that they actually make money selling the cars, so they replace all their cars every six months (in the UK the number plate indicates when the car was registered, in six month periods). This suits the manufacturers, because it means they can offer a lower-cost product to ...


5

Aesthetics aside, laminate floor is attached to the floor and as such is a part of the building. So you depreciate it with the building itself, similarly to the roof. I believe the IRS considers these permanently attached because the foam itself is permanently attached, and is a part of the installation. To the best of my knowledge, the only flooring that ...


5

There are specific cases where you are required to use ADS: Required use of ADS. You must use ADS for the following property. Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property. Any tangible property used predominantly outside the United States during the year. Any tax-exempt use ...


5

By asking about 39 years, I assume you mean a commercial property, as residential is 27.5. Yes, the depreciation starts when you buy it, the history doesn't matter. It's as plain as that.


5

In contracting Non-off-the-shelf software is software that has been modified or developed for you. Microsoft office is off the shelf. Paying a company to develop an add-on to MS office would not be off-the-shelf. How it is delivered isn't relevant. It could be purchased from a physical store, or delivered by the post office, or downloaded. A subscription ...


4

There are several distinctions that need to be made in order to properly address this question. For one the make and model needs to be considered. Each such make and model have different rates of depreciation. Another is the age of a car made in comparison. You cite a two year old car, but the variables will be quite different if you buy one that is five ...


4

This is not a trivial issue, and you should seek a professional advice with a EA/CPA licensed in your state. I can only describe my understanding of the law, but it can in no way be regarded as a tax advice or opinion, and you cannot rely on it in any way whatsoever. As KeithS said, you cannot depreciate an asset bought and sold in the same year. The ...


4

second column doesn't equal 1.0. Year 2014 should be 0.1152 of 314. Yes, year 4 and 5 will have same depreciation expense amounts. Tax Year % Amount of Depreciation 2010 20.00% 314 63 2011 32.00% 314 100 2012 19.20% 314 60 2013 11.52% 314 36 2014 11.52% 314 36 2015 5.76% 314 18 100.00% 314 You ...


4

You are right that computers are depreciated over 5 years. You would normally use MACRS GDS (5 year 200% declining balance) to depreciate. ADS is another option, but as you might have already seen, the recovery period is the same 5 years. However, you will depreciate it on a straight line. So to answer your first question, no, you cannot use your own ...


4

What you paid for it isn't relevant. All that matters is what you can get for it if you sell now, and how much it will cost you to purchase a similar bike in the future. For this item, it is almost guaranteed that you can get more for the bike today than it will cost you to purchase the same bike in the future, so selling now is the right choice. It's likely ...


3

After one year the book value would be $50,000 - $5,000 (10%) = $45,000. After year two the book value would be $45,000 - $4,500 (10%) = $40,500. And so on, until after the fifth year the book value would be approximately $29,524.50. You basically deduct 10% off the new book value each over the 5 years.


3

While this is a business expense question and therefore not technically germane to personal finances, a sole proprietorship owner would have to figure these things out to do his 1040... To the best of my knowledge, you're SOL. You can neither depreciate nor deduct losses for "Section 1231 property" such as durable equipment that was on the books for less ...


3

Does the IRS insist that depreciation is taken or can I choose not to depreciate it? Yes, the IRS will tax you on depreciation recapture whether or not you actual claim the depreciation. According to this article: not depreciating your property will not save you from the tax -- the IRS levies it on the depreciation that you should have claimed, whether ...


3

It's possible the $16,000 was for more than the car. Perhaps extras were added on at purchase time; or perhaps they were folded into the retail price of the car. Here's an example. 2014: I'm ready to buy. My 3-year-old trade-in originally cost $15,000, and I financed it for 6 years and still owe $6500. It has lots of miles and excess wear, so fair blue-...


3

You'll need to depreciate each individually. From IRS Publication 946: If you improve depreciable property, you must treat the improvement as separate depreciable property. Improvement means an addition to or partial replacement of property that is a betterment to the property, restores the property, or adapts it to a new or different use. See ...


3

The measure of change of value of a currency in relation to itself is inflation (or deflation).


3

No. A business may have depreciable assets but is not itself a depreciable asset. A business is an investment.


3

A car is an asset. Period. Even a completely totalled car can still be sold for scrap metal. One would have to come up with an unlikely scenario, such as it being covered in radioactive ash, for it to be a liability. A house is also an asset. People who say that it's a liability are talking nonsense. A mortgage is a liability, but the house itself is an ...


2

Chris and littleadv have given good answers, but I think the real issue is that you're asking about two different types of values, each is used for a separate purpose: 1) The book value of an asset on a company's financial records, and 2) the market value of a property. With your question "Real estate usually goes up in value so why is it depreciable?" ...


2

First, you should probably have a proper consultation with a licensed tax adviser (EA/CPA licensed in your State). In fact you should have had it before you started, but that ship has sailed. You're talking about start-up expenses. You can generally deduct up to $5000 in the year your business starts, and the expenses in excess will be amortized over 180 ...


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