Can a sole proprietorship that took a Section 179 deduction on a pickup truck in 2017 later use the standard mileage method for that vehicle in tax year 2024?
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No, a sole proprietorship that claimed a Section 179 deduction on a pickup truck in 2017 cannot later switch to using the standard mileage rate for that same vehicle in tax year 2024.
Legal Analysis:
1. Section 179 Deduction and Standard Mileage Rate—Mutual Exclusivity
The IRS rules are clear that if you claim a Section 179 deduction (or use any depreciation method other than straight-line) for a vehicle, you are permanently barred from using the standard mileage rate for that vehicle for any subsequent year.
- Rev. Proc. 2019-46 states:
"A taxpayer may not use the business standard mileage rate to compute the deductible expenses of an automobile for which the taxpayer has (a) claimed depreciation using a method other than straight-line for its estimated useful life, (b) claimed a § 179 deduction, (c) claimed the additional first-year depreciation allowance under, for example, § 168(k) or former § 168(n), or (d) used the Accelerated Cost Recovery System (ACRS) under former § 168 or the Modified Accelerated Cost Recovery System (MACRS) under current § 168. By using the business standard mileage rate, the taxpayer has elected to exclude the automobile, if owned, from MACRS pursuant to § 168(f)(1)."
- Publication 225 (2024) and Publication 334 (2024) both confirm:
"You cannot use the standard mileage rate if you claimed a section 179 deduction on the car."
2. Application to the Facts
- The Section 179 deduction was claimed in 2017 for the pickup truck.
- The taxpayer now wishes to use the standard mileage rate for the same vehicle in 2024.
IRS rules prohibit this. Once a Section 179 deduction has been claimed for a vehicle, the standard mileage rate cannot be used for that vehicle in any subsequent year, regardless of how many years have passed since the deduction was claimed.
3. Required Depreciation Method if Switching to Actual Expenses
If the taxpayer stops using actual expenses and wants to switch methods, the only allowable depreciation method for the remaining life of the vehicle is straight-line depreciation, and only for the remaining undepreciated basis (if any). The standard mileage rate remains unavailable for that vehicle.
4.Conclusion
A sole proprietorship that claimed a Section 179 deduction on a pickup truck in 2017 cannot switch to using the standard mileage rate for that vehicle in 2024 or any later year. This prohibition is permanent for the life of the vehicle.
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