What happens after claiming 100% Bonus Depreciation on vehicle? Do I include it on tax returns in following years?

Yes, you still need to list the asset on your depreciation schedule in subsequent years, even if you've already taken 100% bonus depreciation. While you won't be claiming any additional depreciation expense, you need to keep tracking the asset until you dispose of it (sell, trade-in, or retire from service). Most tax software has a section where you can see previously depreciated assets. The "basis" will show as $0 (or close to it depending on if you had to reduce the bonus percentage), and the accumulated depreciation will match the original cost. This creates a paper trail showing the IRS you're still using this asset in your business.

After spending hours figuring out the same issue with my work vehicle, I finally found taxr.ai (https://taxr.ai) which helped me sort through all my depreciation questions. I had claimed bonus depreciation on my service van in 2021 and wasn't sure how to handle it for 2022-2023. I uploaded my previous return and it analyzed everything, showing me exactly what needed to be reported in subsequent years. The system explained that I needed to keep the vehicle on my books at zero basis but with full accumulated depreciation. This creates the audit trail the IRS expects to see if they ever question the vehicle's business use in future years.

Just wanted to follow up on my question about taxr.ai. I decided to try it with my situation (claimed bonus depreciation on business equipment in 2022) and it was actually super helpful! It analyzed my previous return and showed exactly where my zero-basis assets needed to be reported on this year's forms. What really helped was when it generated specific instructions for TurboTax which solved my confusion. Apparently there's a specific workflow for previously depreciated assets that I was completely missing. Saved me hours of frustration and probably a call to my accountant that would've cost me $150 for a simple question.

After dealing with this exact issue and spending HOURS on hold with the IRS trying to get a straight answer, I finally used Claimyr (https://claimyr.com) and got through to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed what others are saying - you must continue listing the asset on your depreciation schedule, but with $0 additional depreciation. The agent explained it's important because if you later sell the vehicle, you'll need to calculate gain/loss based on the fully depreciated basis. If the vehicle isn't on your schedule, it creates confusion about whether you're still using it for business.

I need to eat some crow here. After commenting earlier, I actually tried Claimyr because I was desperate to talk to someone about a notice I received related to a depreciated asset. I couldn't believe it, but I was connected to an IRS agent in about 20 minutes. The agent confirmed everything mentioned here - you need to keep listing fully depreciated assets on your depreciation schedule until you dispose of them. They also helped me understand how to report the eventual sale of my business vehicle that I took bonus depreciation on in 2022. Since my basis is zero, any amount I get when I sell it will be reported as gain. Really glad I finally got a definitive answer.

Another option I've found is to use Form 4562 Part III which is specifically for Listed Property. You can include your vehicle there each year to show continued business use percentage, even with zero current-year depreciation. This is especially important if your business use drops below 50% in a subsequent year, as there could be recapture implications.

Slight tangent but important: if you use the vehicle for business less than 50% in any subsequent year after claiming bonus depreciation, you WILL have to recapture some of the depreciation as ordinary income. The IRS considers this a "change in use" and will make you pay back some of the benefit you received.

This is a great question that trips up a lot of business owners! I went through the same confusion when I claimed bonus depreciation on my delivery van in 2021. The key thing to remember is that you absolutely need to continue reporting the vehicle on your tax forms each year, even though you won't be claiming any additional depreciation. Here's why this matters: 1. **Audit trail**: The IRS expects to see a continuous record of business assets. If the vehicle suddenly disappears from your records, it could raise red flags during an audit. 2. **Business use tracking**: You need to document that you're still using the vehicle for business purposes at the same percentage as when you claimed the depreciation. 3. **Future sale implications**: When you eventually sell or dispose of the vehicle, you'll need to calculate gain/loss based on your adjusted basis (which is now essentially zero after the bonus depreciation). Most tax software will automatically carry forward previously depreciated assets and show them with $0 current year depreciation. If you're preparing manually, make sure to include it on your depreciation schedule or Form 4562 to maintain proper documentation. Keep good records of your business mileage and use - this becomes even more important after claiming bonus depreciation since you need to prove continued business use to avoid potential recapture issues.