In the context of tax deductions for a business vehicle, "actual expenses" typically refer to the ongoing costs of operating the vehicle, such as gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation. The costs for body repair and restoration would generally not be considered as "actual expenses" for the purpose of vehicle operation in a given tax year. Instead, the body repair and restoration costs would likely be capitalized and added to the basis of the vehicle. These costs are not immediately deductible as an expense in the year they are incurred if they are part of a major restoration or improvement that adds value to the vehicle or substantially prolongs its life. Once the restoration is complete and the truck is placed in service for your business, you can begin depreciating the total cost of the vehicle, including the restoration costs, over its useful life according to IRS guidelines. The truck does not need to be in use by the business to incur these restoration costs, but it does need to be placed in service before you can start taking depreciation deductions. Keep in mind that if the truck is used for both personal and business purposes, you must allocate the costs and only deduct the portion that applies to the business use. It's important to keep detailed records of all expenses and the business use of the vehicle to substantiate your deductions. Always consult with a tax professional to ensure you are applying the tax rules correctly to your specific situation. Would you like this answer sent to your email? No Would you like your answer to be reviewed and verified by a tax professional for only $50? No Do you have another tax question you'd like answered? Yes Is your question a follow up to your previous question or on a new topic? No, this is about a new topic Ask your question here: Questions may be used for content creation. i own three classic cars and want to earn income renting them out. Two of the cars need a major restoration. How can i deduct the expenses of restoration from my taxes?

If you're planning to rent out your classic cars as part of a business, the costs associated with restoring those vehicles can be considered part of your business expenses. However, the way these expenses are deducted can vary depending on the nature of the restoration: 1. **Repairs vs. Improvements**: The IRS distinguishes between repairs and improvements. Repairs are typically deductible in the year they are made because they keep your property in good operating condition without materially adding value or prolonging its life. Improvements, on the other hand, add value to the car, prolong its useful life, or adapt it to new uses and must be capitalized and depreciated over time. 2. **Capitalized Costs**: Major restorations are often considered improvements. This means you would add the cost of the restoration to the basis (the value for tax purposes) of each car. You would then depreciate this cost over the useful life of the vehicle as determined by IRS guidelines. 3. **Depreciation**: Once the cars are restored and ready for use in your rental business, you can begin to depreciate them. The IRS has specific guidelines on how to calculate depreciation for business vehicles, including the Modified Accelerated Cost Recovery System (MACRS). 4. **Business Use**: To deduct these expenses, the cars must be used for business purposes. If they are also used for personal purposes, you can only deduct the portion of the expenses that apply to the business use. 5. **Record-Keeping

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