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Putting a brake on business-car write-offs

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in Small Business Tax,Small Business Tax Deduction Strategies

Q. I’ve started using my spouse’s car for business this year. We bought the car in 2005 for about $35,000. Can I base my write-offs on the full cost? B.B., Flanders, N.J.

A. No. When you convert personal property, such as a car, to business property, your basis is generally the lesser of its cost or the fair-market value at the time you convert. Assuming your spouse’s car is now valued at say, $25,000, that is the starting point for your depreciation deductions.

Tip: The car is subject to the annual “luxury car” limits for depreciation purposes.

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