Automobile and Truck Expenses

Course Description:

Automobiles and trucks have long played a large role in the life of Americans, both for personal and business purposes. According to the U.S. Bureau of Transportation Statistics, there were a total of 264 million registered cars, motorcycles, trucks, buses, and other vehicles in the United States at the end of the year 2015. Additionally, according to the Internal Revenue Service, 27.5 million of the tax returns filed by individuals in the year 2014 reported sole proprietorship business income or loss. As these numbers have continued to climb each year, it stands to reason that many of the business activities reported by taxpayers annually include the use of motor vehicles of one kind or another, whether in the form of a semi-trailer used by a long-haul trucker in the course of transporting freight from one state to another or a small sedan used by a salesman calling on clients in an assigned territory. In these and other cases, ordinary and necessary expenses associated with vehicles used in the course of conducting business are deductible from business income.

The purpose of this course is to provide a comprehensive and detailed review of the rules surrounding automobile and truck expenses, including the types of expenses—including depreciation—that are eligible for deduction, the associated record-keeping requirements, the handling of the sale or other dispositions of vehicles, the reporting methods that should be used, and the available tax credits.
The course is mainly focused on sole proprietors and Schedule C but also includes information on other types of taxpayers such as employees.

Learning Objectives:
After completing this course, you will be able to:
  • identify the types of work-related car and truck expenses that may qualify for deduction by a taxpayer and the available general methods that may be made to claim those expenses
  • identify the three types of deduction that a taxpayer may qualify to claim under the heading of depreciation for a car or truck that the taxpayer uses for business purposes
  • identify situations and circumstances where a taxpayer may have to recognize a gain or loss on the disposition of a vehicle that has been used for business purposes
  • given appropriate taxpayer records, correctly calculate the taxpayer’s available deduction for motor vehicle expenses and identify the correct form(s) for reporting the deduction to the IRS
  • identify the main characteristics of the vehicles that may qualify for each of the three motor vehicle tax credits that were available during the 2017 tax year

Tax Year: 2018
Prerequisites: General understanding of individual tax law

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