Free Tax Tips

Comment posted How much tax write off am I allowed? by Ken.

If the demo vehicle and the products installed in the car are used for 100% business purposes then all the costs related to the demo products, including the installation, are 100% deductible.

However, because all these costs are related to the improvement of a vehicle, the costs may be subject to fixed asset/special depreciation rules and may not be eligible for 100% deduction in the year in which they were purchased. In all likelihood, depending on the net income of the business and the total cost of the vehicle, the entire costs would be eligible for 100% deduction in the current year using the Section 179 deduction (which allows you to deduct up to approximately $108,000 per year in fixed asset purchases, providing the total cost of the asset does not exceed the business’ current year net income).

Recent comments by Ken

• Writing Off IRS Audit Cost?
  Yes, as a legal/accounting fee. You’ll be able to deduct it on your tax return.
• Upgrade My House, Then Write Off the Depreciated Value?
  Some assumptions- You are currently renting out space #2, but are considering renting out space #1, where you currently live, in the future.

  The bathroom improvement would be a depreciable addition for space #2. For space #1, the improvement to your own home would be an increase in your basis in the property. If you ever sell the duplex, this will offset the gain, if applicable. If you decide to rent out space #1 in the future, you can depreciate your basis at that time.

• Tax Write Off for Donation Car to Family Member
  No you can’t it must be a real charity. Otherwise everyone would call it donation when it is just a gift to family.
  You may not have anyhow if you don’t itemize and the charity must sell the car to determine the deduction. If they use it in the charity you don’t have a value to declare.
• Will Filing Amended Return Trigger IRS Audit?
  You will be paying them $950 more with the amendment and they may want some interest. That is likely the last you hear about it. If you can support the numbers on the amendment why worry about an audit. In most cases if you are not trying to do something wrong an audit is no big deal other than the time it take to prepare.
• Does the IRS Call People They are Going to Audit?
  If you have a unpaid tax bill and haven’t paid it, IRS may try to call you before taking enforced collection action.

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