Wednesday, February 22, 2012

Choose the Right Valuation

Q.  In July last year, I started as a rep for 3 different companies selling advertising for various campground directories.  I purchased my car in 2010 and want to use the actual cost method as opposed to the mileage method. For depreciation purposes, I use the amount I paid for the car, right?

A.  Maybe. The rule is the lesser of the FMV of your car when you place it into service or your cost. Most cars depreciate right after you drive them off the showroom floor, so you may have to use an amount less than you paid for your car. Check the Kelley Blue Book or Edmunds websites to get an estimated value of your car when you placed it into business use. IRS auditors are quite savvy about this basic rule.

1 comment:

  1. A tax depreciation schedule involves:
    A full inspection of your property to identify all depreciable items
    An historical construction cost estimate of the main building
    Valuation of all plant and equipment items
    Preparation of a report which is accepted by the ATO and summarises the depreciation allowances for the future years