The IRS is on our backs. And truly 2020 will have it’s say in how we feel about it, as return filing begins in the following week. February 12th, for all intensive purposes, is already getting to owner-operators as they gather info and documents. While also trying to decide with financial counsel what is proper for large expenditures.
One of the many, is based on how to treat large expenditures on truck/trailer equipment which can be depreciable. As it turns out, every owner-operator knows when truck/trailer purchases are seen as assets that depreciate.
Plenty of new owners can’t realize that larger repairs, rebuilds and component replacements on pieces of equipment are the assets themselves. Though the deductions take over years to occur.
Usually, improvements to depreciable are likely to be seen as large expenditures.
One of those decisions: How do we go about treating large expenditures on truck or trailer equipment that are depreciable? Because technically speaking, every owner-operator knows a truck or trailer purchase is an asset that depreciates (for tax purposes, trucks generally on a three-year depreciation schedule, trailers on a five-year).
Large Expenditures or Large Exercises Of Time Wasted
Plenty of new owners and others might not get it. Bigger repairs/rebuilds/component replacements on either piece of equipment can are treatable! Similar to the assets themselves and thus easy to depreciate — with deductions taken over years. Usually, improvements to a piece of depreciable property are starting to depreciate on the same schedule length as the base property itself (three years for trucks, five for trailers).
Your best bet is to avoid zeroing out your income and not gorge on expense deductions. It’s our worst at best. Otherwise, you may miss out on qualifying deductions. Cuts that you might not so easily get back. Large Expenditures better beware! Low income does raise a likelihood of an audit also.