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Reduced auto travel: Proceed with caution

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. The business use of my car will be less than 50% this year. Can I still claim deductions for business travel? B.D., Memphis, Tenn.

A. Yes, but with certain qualifications. If you use the standard mileage rate, you may deduct 50 cents per business mile (plus tolls and parking fees) in 2010, regardless of the percentage of your business use. However, if you’re deducting actual expenses, you can’t claim the Section 179 deduction or accelerated depreciation for the cost of the vehicle if your business use doesn’t exceed 50% of the total use.

Tip: If you claimed the Section 179 deduction or accelerated depreciation in the past, you must recapture some tax benefits in a year in which your business use drops below 50%.

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