I am currently using H&R Block to prepare our S-corps taxes. We purchased a passenger vehicle in June of 2011 for $148,150. Last year (2011) we depreciated $39,698 (MACRS=$10,068, 5 year, HY, 200 DB = $29,630). This year our current depreciation was calculated to be $4,900 (5 year, 200DB, HY, 32% Dep rate). The vehicle is only for business use. Our payments for our 5 year loan this year were over $25,000, excluding interest. I believe the current depreciation should be more than $4,900. Any help would be appreciated.

I assume that you use the passsenger car 100% for your biz use. You purchased a new car in June 2011 for $148,150. No matter how expensive the vehicle, your maximum depreciation in the first year (2011) is $11,060. You would take $4,900 of depreciation in 2012; $2,950 in 2013; and $1,775 in 2014 and subsequent years until the car is fully depreciated. Thus, a $148,150 car would take about 15 years or more to fully depreciate. Note. There are other rules that can further limit your depreciation. The first-year limit also applies to any Sec. 179 expense option. HOWEVER, some sport utility vehicles fall outside of the definition of passenger autos and can be depreciated or expenses under sex 179 or the bonus depreciation rules w/o regard to the auto depreciation limits. To qualify for the exception, the SUV must have a gross vehicle weight rating above 6,000 pounds.


NOTE;The Sec. 179 deduction for SUVs that meet the 6,000 pound loaded gross vehicle weight requirement purchased after October 22, 2004 is limited to $25,000. The SUV limit applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds GVW. However, the $25,000 limit does not apply to any vehicle