Truck depreciation is a key element of truck ownership because the depreciation method a truck owner uses sets the pace that taxes are due on the income that a truck produces.
Tax accountants are equipment depreciation method experts. Arguably, they are paid to give advice that gives the maximum tax deduction in the current year. The IRS allows and most accountants advise their clients to quickly accelerate truck tractor depreciation.
Truck owners that accelerate depreciation get a big raise one year (because they pay little or no income taxes by using more than 40% of the trucks basis value ) followed by several years of pay cuts (pay significantly more income taxes)... unless they invest a similar amount in depreciable equipment, every year...
My savvy customers commonly tell me their solution is to simply depreciate gradually, over a longer period... to a salvage value.* You might talk to your accountant about best matching long term tax implications to your truck ownership strategy.
Act on the advice of your tax accountant, but ... to me, it is a wry truth that different tax accountants interpret very differently
*they treat the IRS 3 year road tractor "rule" as a minimum depreciation term rule; not a rule for both the minimum allowable term and the maximum depreciation term
(they are arguing, I think correctly? that it makes no sense for the IRS to insist that a deduction be taken - therefore paying taxes early, even if measured, can be no foul? For some of you, this can be a big important deal... have a planning talk with your tax guy. I have been around a long while and have not yet heard of anyone getting in trouble using the approach noted. That said, I would appreciate anyone with firsthand contrary or helpful information to give me a call. :) ld 260-740-2366)