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Can I depreciate the remaining basis in a business vehicle (100% used for business- Bus for transport) if it becomes inoperable?

This is also the final year business return, so it has some capital impacts to the partners.
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5 Replies 5
BobKamman
Level 13

A new battery, and maybe it's as good as new.

Really not enough information here to come up with an intelligent answer.  So maybe you've come to the right place.  

I appreciate your quick response ! The adjusted basis in the bus is 10k and they said that they think it would cost 2-5k to get it to run again. They don’t think they could sell it for what they have to put into it , so their plan is to junk it or donate it. 

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Terry53029
Level 11
Level 11

 This is reply to your heading, but don't know about statement in the body of question. you may simply scrap an item because it has no further use in your business and has no resale value. When this happens, you treat the disposition as a sale for no money, which will produce a loss equal to the balance of the adjusted basis at that time.

BobKamman
Level 13

@Terry53029 

Yes, I'm still scratching my head over how this could be a final return if that bus is still parked out front.  

I think your answer is correct, about what to do with the remaining basis.  It always bothers me that depreciation reduces self-employment tax, but loss on disposition of an asset (including abandonment) does not.  

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qbteachmt
Level 15

It should also be noted that if it is "sold" for any value at all, that isn't Scrap. That sale is computed for Gain or Loss on Disposition.

You are not Depreciating; that is "we used up the value over time."

You are Disposing.

Scrap is a perfect example: the metal itself likely brings in some money, when something is truly scrapped.

Then, "donating" has different rules than "using and depreciating" and "selling for residual value."

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