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Porsche (996) depreciation

Old 10-25-2002, 07:42 PM
T Hendricks
Join Date: Mar 2002
Location: Chicago
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SpectraG - Yes. This was the nature of my earlier inquiry also.

There are multiple ways the cap. cost of an automobile used partially/fully for business purposes may be recovered - and it varies a bit if the car is purchased or leased. Here are the general rules -

Under the ACTUAL EXPENSE METHOD, depreciation expense is determined under special rules related to assets classified as "luxury autos". Essentially, the cost is recovered based on tables published by the IRS which limit the amount of depreciation in each year until the total cost of the vehicle is recovered or the asset is sold or otherwise converted (traded-in, etc.) These tables are published and adjusted annually to reflect inflation/deflation.

For example, since GonzoP1 purchased and presumably "placed his 996 in service" in 2001, the maximum annual depreciation expense would be $3,060 in 2001, $4,900 in 2002, $$2,950 in 2003 and $1,775 in each succeeding year.

An alternative method, called the STANDARD MILEAGE RATE uses pre-set rates to determine the deductible costs of operating an automobile for business purposes. Use of this method eliminates the need to track actual expenses for fuel, oil, maintenance, insurance, etc.

For example, in 2001, the standard mileage rate was set at 34.5 cents - which reflects the cost of all operating expenses, including depreciation. Of the total 34.5 cents, the depreciation component was set at 15 cents. Therefore, for each business mile driven, 15 cents represents deductible depreciation for tax purposes.

Sorry for the long post - hope this information is helpful.
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