Using a Motorcycle for Business, What's the Tax...

Christy's Tax Tips


Question: I have a self-employed business client that purchased a motorcycle for business use (to save gas). When inputting the asset into my software, I do not see an asset type for this. What asset type do I choose? I am going through the form instructions on IRS.gov, however, as we know there are nuances and specifications that I may not be aware of. Please help!


Christy's Answer:  The MACRS asset class for a motorcycle is the same as any other vehicle: 5 years.  There are some nuances, however. First, your professional software may not actually list "motorcycle" as a vehicle choice. But, it doesn't matter what the software says. Take, for example, a golf cart (that is used as a business vehicle on a golf course) or an ATV that is used on a farm. These are all specialty vehicles that can be business-use, depending on the taxpayer's scenario. Your software may not list any specialty vehicle like that, but a motorcycle still a vehicle with a 5-year depreciation class life. Some caveats: Motorcycles are considered "listed property". This means the taxpayer can only claim Section 179 depreciation if the asset is used at least 50 percent of the time for business. Taxpayers also have to keep records of the motorcycle's use. Motorcycles also cannot use the standard mileage rate. This requires the taxpayer to keep track of what they actually spend during the year for gas, repairs, maintenance, insurance, license and registration fees, and other expenses, such as mandatory safety gear (like a helmet). This is true of all similar vehicles, as well, such as: mopeds, scooters, or bicycles. These vehicles must use actual expenses or actual costs.

posted Oct 23, 9:05 am (165 days ago)