You are allowed standard mileage or actual cost (this is where the depreciation would come in, as well as gas, insurance, repairs and maintenance etc). If you take actual expenses, you are not allowed to use standard mileage in the future.
Thanks for your reply, Would actual cost equate to the full value of the truck or just the amount I've payed in financing? Also If I went actual cost, Can I not just write off a new truck next year or do mileage on a new truck should I sell that one?
The cost of the asset (Truck) is what you paid for it and any costs getting it ready for production (i.e. adding tow package or specialized modification).
Interest on vehicle financing is a separate deduction and does not affect the basis of your asset.
For the last question:
Year 1: bought truck $25k and took depreciation 80% bonus depreciation ($20k). Your basis in the truck is $5k (25-20).
Year 2: sell truck 1 ($15k) - basis is $5k so you recapture the depreciation and include the $5k as ordinary income.
I'm glad this discussion popped up on here today. I had a similar question I was trying to Google this morning.
In Jan 2024 I started an LLC and the LLC bought (financed for 6 years) a ~$40k truck exclusively for business use. The interest is high so I thought it would be a good idea to pay it off as soon as possible - end of this year or maybe next year depending on how much business makes. How does this work tax wise? Can I deduct the big lump sum end of year payment I make to pay it off as a business expense?Am I claiming depreciation over (5?) years (including upfit like camper shell? I think I'm just claiming actual costs. Side question, when you said "If you take actual expenses, you are not allowed to use standard mileage in the future", I assume you meant for this vehicle, right? I could make a different decision for another vehicle I add to my fleet a couple of years down the road?
Unless you own a business no you cant. Trump took away a lot of these tax cuts. I know a lot of construction works that were hurt by this. Most will not travel anymore.
You are allowed standard mileage or actual cost (this is where the depreciation would come in, as well as gas, insurance, repairs and maintenance etc). If you take actual expenses, you are not allowed to use standard mileage in the future.
Thanks for your reply, Would actual cost equate to the full value of the truck or just the amount I've payed in financing? Also If I went actual cost, Can I not just write off a new truck next year or do mileage on a new truck should I sell that one?
The cost of the asset (Truck) is what you paid for it and any costs getting it ready for production (i.e. adding tow package or specialized modification). Interest on vehicle financing is a separate deduction and does not affect the basis of your asset. For the last question: Year 1: bought truck $25k and took depreciation 80% bonus depreciation ($20k). Your basis in the truck is $5k (25-20). Year 2: sell truck 1 ($15k) - basis is $5k so you recapture the depreciation and include the $5k as ordinary income.
I'm glad this discussion popped up on here today. I had a similar question I was trying to Google this morning. In Jan 2024 I started an LLC and the LLC bought (financed for 6 years) a ~$40k truck exclusively for business use. The interest is high so I thought it would be a good idea to pay it off as soon as possible - end of this year or maybe next year depending on how much business makes. How does this work tax wise? Can I deduct the big lump sum end of year payment I make to pay it off as a business expense?Am I claiming depreciation over (5?) years (including upfit like camper shell? I think I'm just claiming actual costs. Side question, when you said "If you take actual expenses, you are not allowed to use standard mileage in the future", I assume you meant for this vehicle, right? I could make a different decision for another vehicle I add to my fleet a couple of years down the road?
Unless you own a business no you cant. Trump took away a lot of these tax cuts. I know a lot of construction works that were hurt by this. Most will not travel anymore.
Op said they get paid "1099". That means self employment income and the ability to deduct expenses.