1. UberPeople.NET - Independent community of rideshare drivers. It's FREE to be a person and enjoy all the benefits of membership. Sign-up HERE!

Cash hiding inside the standard mileage deduction?

Discussion in 'Taxes' started by UberTaxPro, Mar 22, 2017.

  1. UberTaxPro

    UberTaxPro Well-Known Member

    Location:
    CT
    Driving:
    UberX
    Most people think that if you've taken the SMD you've taken all your deductions and there is nothing else to think about. Wrong. You might miss a large deduction when you sell the vehicle.

    The SMD has a built in depreciation amount. For 2016 it is .24 cents a mile. For 2017 it's .25 cents a mile.(See section 4.04 of Rev. Proc. 2010-51) The vehicle you've been taking the SMD on is a depreciable asset and requires recognition of a gain or loss on your tax return when you sell the vehicle. Here's a simple example:
    You buy a car for $35,000 and use it 100% for business. You drive the car for 30,000 miles taking the SMD and then sell the car for $15,000. In 2017 your depreciated basis is $27,500 ($35,000-$7500{.25 x 30,000})
    Your tax deduction is $12,500($27,500-$15,000)

    You need to sell your vehicle to a third party to gain this deduction, a trade in won't work. If you trade your car the tax code adds the basis to the new vehicle.
    Also, if you have a gain on the sale this can work against you. I would say a gain would be rare for a car used for ubering an extended period of time. If you do have a gain a trade in would be better. You can add the gain to the basis of the new vehicle and defer the tax.
     
    Last edited: Mar 22, 2017
    Lee239 and rubivroom like this.
  2. Owneroperator

    Owneroperator New Member

    Location:
    Oregon
    Am I able to deduct my car loan interest like we can our business credit card interest? While still claiming SMD?

    Thank you so much too as I have been reading a lot and you are very knowledgeable and spot on.
     
    UberTaxPro likes this.
  3. UberTaxPro

    UberTaxPro Well-Known Member

    Location:
    CT
    Driving:
    UberX
    Yes, but only the business use % of the interest.
     
  4. bobby747

    bobby747 Well-Known Member

    Location:
    pa
    what about with exchange leasing next year. i am in an uber wav hanicapped van. $170 a week. but i get incentives to drive it in my pay...what do i do tax time >>??? i been driving over 3 years...black suv ..x now this..thanks in advance....i killed my 2015 nissan altima with miles 75k....but i love using thier car with big incentives in pay....gas miles is very poor in city 12...hwy 24...99% city
    thanks in advanced
     
  5. Miles907

    Miles907 Active Member

    Location:
    Milton

    Whats going on if i buy used Prius for 8k for ubering and after 50000miles (100% business use) i sell it to third party for 4000$. Is this deductions going to work for used cars? Thank you
     

  6. El Gato

    El Gato Active Member

    Location:
    Cedar Park
    Driving:
    UberX
    how does this work for a vehicle not 100% business use? Just the % of business vs personal?
     

Share This Page