Depreciation and section 179 deductions. Generally, the cost of a car, plus sales tax and improvements, is a capital expense. Because the benefits last longer than 1 year, you generally cannot deduct a capital expense. However, you can recover this cost through the section 179 deduction (the deduction allowed by section 179 of the Internal Revenue Code), special depreciation allowance, and depreciation deductions. Depreciation allows you to recover the cost over more than 1 year by deducting part of it each year. The section 179 deduction, special depreciation allowance, and depreciation deductions are discussed later.
Generally, there are limits on these deductions. Special rules apply if you use your car 50% or less in your work or business.
You can claim a section 179 deduction and use a depreciation method other than straight line only if you do not use the standard mileage rate to figure your business-related car expenses in the year you first place a car in service.
If you claim either a section 179 deduction or use a depreciation method other than straight line in the year you first place a car in service, you cannot use the standard mileage rate on that car in any future year.
Car defined. For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its unloaded gross vehicle weight must not be more than 6,000 pounds. A car includes any part, component, or other item physically attached to it or usually included in the purchase price.
A car does not include:
An ambulance, hearse, or combination ambulance-hearse used directly in a business,
A vehicle used directly in the business of transporting persons or property for pay or hire, or
A truck or van that is a qualified nonpersonal use vehicle.
Qualified nonpersonal use vehicles. These are vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes. They include trucks and vans that have been specially modified so that they are not likely to be used more than a minimal amount for personal purposes, such as by installation of permanent shelving and painting the vehicle to display advertising or the company's name. Delivery trucks with seating only for the driver, or only for the driver plus a folding jump seat, are qualified nonpersonal use vehicles.
I consider my trucks to be qualified nonpersonal vehicles, I use actual expenses and I have a personal car. I do not tool around on personal erands.