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| Clean fuel vehicles first year deduction & Clean fuel and electric vehicles classified as luxury |
| Electric run vehicles is the thing of the now present and production of such keeps improving. Federal and California are offering every incentive possible to accelerate the more modern process. You can get a higher depreciation deduction for automobiles that run primarily on electricity. To get the maximum depreciation deduction for these automobiles, they must be passenger vehicles and they must mainly run on electricity. For Internal Revenue Service purposes, the original purchaser of a qualifying gas-electric car was able to deduct $2,000 for the year the vehicle was first used and that was before 2006. Many models qualified for the clean-fuel vehicle deduction. Except that California does not conform to federal tax law for the first year deduction on clean air fuel. |
| Today, there are more than 20 models of plug-in vehicles available on the market. These cars are not that expensive either. Not only that, but you get a plug-in electric vehicle drive vehicle credit too! The electric vehicles which are candidates for the credit include passenger vehicles and light trucks. The credit could $2,500 for automobiles acquired after December 31, 2009. Furthermore, you qualify for higher credit amounts dependent on the battery size or battery capacity of the vehicle. However, the maximum credit you can get with your federal tax return is limited to no more than $7,500. |
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There are vehicles which are equipped to qualify as clean burning fuel vehicles. Most of these vehicles are electric vehicles or a hybrids which most operate on plug-in electricity. Federal law allows a modified depreciation limitation equivalent to triple the normal limitations for other luxury vehicles for vehicles which were placed in service after August 5, 1997 and before January 1, 2005. California conforms to this provision but only for vehicles placed in service after December 31, 1997. If the federal amounts you calculate for these credits differ from federal, you must account for the deference on form FTB 3885A and make the adjustment on Schedule CA of Form 540 or Form 540NR. In addition, if you have a first year clean air fuel deduction for federal, add the amount deducted back to California by enter the deduction on Schedule CA of Form 540 or Form 540NR, line 36, column B. |
| Start-up expenses (IRC Section 195) |
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What is IRC Section 195? Section 195(b) provides that start-up expenditures that may be allowed as a deduction spread equally over a period of not less than 60 months that begins when the business begins. The start expenses include practically any expense that occurs before the day the business started transacting its business. These expenses include items like investigation costs and other necessary expenses such as legal fees to get the business started on the right track. There are certain limitations such as not being able to deduct an expense for which you will get a credit or deduction in another part of your federal tax return. For tax years after January 1, 2010, you can claim a deduction for start-up expenses of $10,000 which is an increase the former $5,000 allowed. The phaseout threshold was increase too from $50,000 to $60,000. However, California does not conform with the increase and the maximum allowable deduction for start-up expenses for California stays at $5,000. So what happens to the excess if you have expenses that are more than federal or California permits to be deducted? You amortized the excess expenses over a 180-month period. What this means is that California and federal amounts will be different so you have to make an adjustment on Form FTB 3885A to figure the depreciation adjustment to enter on Schedule CA of Form 540 or Form 540NR. If the California allowable expenses match with the federal amount at no more than $5,000, then there is no adjustment needed on Schedule CA of Form 540 or Form 540NR. California is low on the deduction allowed of $5,000 when federal allows double the amount. |
| Cellular phones |
| Owning a cell phone now is like owning a microwave. It is so inconvenient to not own one. For the longest time, cellular phones were treated as listed property for federal depreciation purposes. We can only guess |
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| Revised: 07/09/15 |
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