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Weekly Lessons, created and written by Richard R. Hammar, J.D., LL.M., CPA, give you a basic legal overview of essential topics based on staff or volunteer positions within a church.

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Week of February 9

Car Expenses—Commuting

This Week's LessonWeek of February 16

Car Expenses: Standard Mileage or Actual?
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Depreciation and "section 179 deductions"

Generally, the cost of a car is a capital expense. Because the benefits last longer than one year, you generally cannot deduct a capital expense. Instead, you "recover" this cost by claiming a section 179 deduction (the deduction allowed by section 179 of the tax code) and a depreciation deduction. By using depreciation, you recover the cost over more than one year by deducting part of it each year. The section 179 deduction and the depreciation deduction are discussed later. Generally, there are limits on both of 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 depreciation using a method other than straight line for its estimated useful life in the year you first place a car in service, you cannot use the standard mileage rate on that car in any future year.

Section 179 deduction

The section 179 deduction allows you to treat part or all of the business cost of a car as a current expense rather than taking depreciation deductions over a number of years. The limit on total section 179 and depreciation deductions (discussed later) may reduce or eliminate any benefit from claiming the section 179 deduction. You can claim the section 179 deduction only in the year you place the car in service. For this purpose, a car must be placed in service. A car first used for personal purposes cannot qualify for the deduction in a later year when its use changes to business.

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