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How to Recalculate Depreciation Limits for Luxury Vehicles

Created on  | Last modified on 

Summary

Updated Luxury Vehicle depreciation limits for Autos and Trucks.

Description

Cause

The Tax Cuts and Job Act of 2017 (TCJA) combined Light Trucks and Vans, and Luxury Autos into one category for purposes of the annual depreciation limit tables. In addition, the TCJA changed the method and factors used to calculate the inflation adjustment for Luxury Vehicles placed in service in 2019 and later. Going forward Light Trucks and Vans, and Luxury Autos will collectively be referred to as Luxury Vehicles.

For Property Type A and T, the depreciation limits in Sage Fixed Assets can be understated if the assets were entered prior to the yearly Tax Update release. The application will not automatically adjust for the changed depreciation limits or the 168 amount calculated on asset(s) enter prior to the Tax update (the yearly .1 version of the Sage fixed Assets program)

For the latest annual depreciation limits for Luxury Vehicles see the Automobile (Type A) Help Topic.

Resolution

CAUTION: Use caution when working with the below product functionality. Always create a backup of your data before proceeding with advanced solutions. If necessary, seek the assistance of a qualified Sage business partner, network administrator, or Sage customer support analyst.

 

 

 

Note: This article is for retroactively adjusting Luxury Vehicle limits. These steps are not needed for vehicles added after updating to most recent Sage Fixed Assets Tax Update has been installed.

Note: To take a Section 179 deduction towards the Luxury Vehicle limit, you will have to make an entry up to the full first year available Luxury Vehicle limit in addition to the steps below.

Once the Sage Fixed Assets Tax Update has been applied for the current tax year, follow these steps to update your depreciation calculations:

  1. Create a Group which the Criteria of Property Type is A and Property Type is T (See How to create a group for more details)

    Note: The 168 Allowance Switch will not affect assets that have been Disposed or Transferred. In order to make changes transacted assets, the transaction must first be deleted.
  2. Using the 168 Allowance switch (See How to apply 168 allowance for more details) Select the Group created above
  3. First elect to Do not Take the 168 allowance for the FY end of 2019 and then 2020, then elect to Take the 168 100% Allowance for the FY end of 2019 and 2020

    Note: Property Type A or T assets Placed-in Service, Disposed or Transferred in calendar year of 2018 are not impacted by this issue.
  4. Then using the Force Recalculate option run depreciation on the Group to the current date to see the changed calculations. See How to run Depreciation for addition information.

 

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