Discussion:Classic car depreciation

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Discussion Forum Index --> Tax Questions --> Classic car depreciation


Hi-tek (talk|edits) said:

11 January 2006
a client (restaurant) bought a 1950 classic car to park out front of the diner for advertising. the car has license plates and cost $3200. is this classic treated the same as regular cars for depreciation ($2960 max for 2005) and depreciated over 5 yrs total?

thanks.

MArdelean (talk|edits) said:

11 January 2006
Using it as 5-year property sound correct.

Msdcpa999 (talk|edits) said:

11 January 2006
i agree.

Captcook (talk|edits) said:

23 January 2006
A 1950 car for display that cost $3200? It would seem to me that there may be other costs worth capitalizing. Just a thought.

DR BRISKET (talk|edits) said:

26 January 2006
Last year I had a client who was in an LLC with his wife. The business was an old restored barn that was converted into a meeting facility. It also serves food. The client, using his own funds, purchased an antique model A Ford (I don't remember what year it was). The car cost his $11,000.

He wanted me to write it off as an advertising expense. In the car club he belongs to, he said that's what most all of the other club members did--that there accounts said it was legit.

He never parked the car at the barn. And, it was titled in his personal name. I told him I couldn't allow the deduction. He went to a CPA friend of his for a second opinion. The CPA told him that he could indeed deduct it.

So, he told me he wanted the CPA to take over doing his tax and accounting work. So, I lost a good account. But, I'm not losing any sleep over it. In the event his return gets audited, and this deduction surfaces, I feel the IRS will disallow it. I would think, also, the CPA should have deducted it using the depreciation rules for automobiles as opposed to calling it an advertising expense. I'm glad it will be him rather than me trying to justify this expense to the IRS.

RLMCPA (talk|edits) said:

29 January 2006
If the car is bascially a sign and not driven, I would consider expensing it as advertising. This is somewhat agressive, but I think you could support it if the care just sits there.

James1 (talk|edits) said:

20 March 2006
Advertising expense? By the same logic the cost of a billboard would be currently deductible (billboards are depreciable assets, although the cost of papering it with the advertisement is probably currently deductible if the ad is in place for less than one year). It may not be used for transportation but it is still a car. I would depreciate it over five years. Here's something from the CCH Depreciation Guide on antique autos & some annotations dealing with advertising:
Copyrighted material removed, see TAXALMANAC.ORG WEBSITE USE AND CONTRIBUTION TERMS, Tim Doyle, TaxAlmanac Moderator 23:11, 28 March 2006 (CST)

DJS3591 (talk|edits) said:

16 May 2006
I DO NOT BELIEVE ANY DEPRECIATION IS ALLOWED. IN ORDER FOR AN ASSET TO BE DEPRECIABLE IT MUST HAVE A LIMITED LIFE. BY DEFINITION, A CLASSIC AUTO ONLY APPRECIATES IN VALUE SO NO DEPRECIATION IS ALLOWED. ANY OPERATING EXPENSES MAY POSSIBLY BE WRITTEN OFF AS AN ADVERTISING EXPENSE IF IT PLACES THE BUSINESS NAME IN PUBLIC VIEW.

TaxArt (talk|edits) said:

16 May 2006
So, are you saying that any asset that appreciates in value over time should not be depreciated? What if something happens to the car or the market for that make/model evaporates?

Warren (talk|edits) said:

16 May 2006
Real Estate also appreciates in value and depreciation is allowed except for the land portion of course. Even though a classic auto might sppreciate in value, it still has a limited life for depreciation purposes. If the car is currently registered I would depreciate as an auto but if it is not I would depreciate as a sign including using Section 179 if desired.

Michaelstar (talk|edits) said:

19 May 2006
If the client HAD parked the car at the barn - and not driven it to car shows or the local dinner on Sunday's - I would also capitalize it as a sign as Warren. But you said he never parked it at the barn - that seems to imply - the t/p did not use it as a sign so an $11K auto would be my next and probably only choice. This client of yours probably did not like it then when you told that he needed to maintain auto mileage records and that the personal portion of the expenses to maintain the auto would be non deductible. Puting a banner on the side of a car and driving it around town does not make it an advertising expense. The IRS auditor would have a field day with that one - especially with no mileage records.

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