Expense or depreciate?

[Taxgirl]

Would you guys expense engine repair on a truck or depreciate it for an S-Corp? If depreciate, then for how long? My client spent $1,200 on the repairs.

Thanks!

[Janitor Bob]

Would you guys expense engine repair on a truck or depreciate it for an S-Corp? If depreciate, then for how long? My client spent $1,200 on the repairs.

Thanks!

sounds like an expense to me

[michaelmars]

expense

[Pacun]

Would you guys expense engine repair on a truck or depreciate it for an S-Corp? If depreciate, then for how long? My client spent $1,200 on the repairs.

Thanks!

On your short posting, you used the word "repair" twice, so I would expense it.

[Gail in Virginia]

It depends. Is this a repair or a rebuild of the engine? If it materially extends the useful life of the asset, you might be supposed to depreciate it.

[mircpa]

"On your short posting, you used the word "repair" twice, so I would expense it."

Looks more like psychological evaluation response.

[jainen]

>> If it materially extends the useful life of the asset<<

Thank you, Gail. I was having a hard time being the contrarian on this.

While the minor cost would seem to indicate a "repair," if that was just the price of parts on a self-installed modification to convert to LPG or otherwise make the vehicle suitable for a different use, then it is a depreciable asset. However, just restoring the vehicle to it's original use and condition would not extend its life because it would still be five or seven year property.

[OldJack]

>>and condition would not extend its life because it would still be five or seven year property. <<

Like you said "say something stupid" and OldJack will say something stupid.

Capitalizing because of extending life has nothing to do with the tax life classification of property. You could spend a million dollars on a car and it would not change the class life for depreciation, its still 5 or 7 year property. It's will the expenditure increase the useful life of the property beyond the original life of the type property in that you now have a new life for a property. Thus the $1200 would be depreciated over a new life rather than add to the original vehicle being depreciated. I agree in this case I would expense as a repair.

[michaelmars]

don't know all the paramaters but, with sec 179 doesn't really make a difference