Can you take the tax deduction twice?

Phone the IRS. They're actually pretty nice. They have a toll-free number. They're probably at www.irs.gov.

Or ask a tax professional. I would not trust H&R Block or a casual poster on a discussion board.

 

No, you can't take the deduction for the '02.

The vehicle must be used by the owner for 3 years. If it is sold (or destroyed in this case), the difference must be given back.

Also, only one deduction per vehicle is allowed. If you bought the '02 used, you couldn't take a deduction unless you get a document from the previous owner proving they didn't take the deduction already.

 

I traded in my 2002 Prius (purchased 10/2001 with $2000 tax deduction claimed for that year) on a 2004 Prius last month. I owned the car for less than three years and intend to claim the $1500 deduction on the 2004 for this year.

IRS Publication 535 says (in part, boldface type is mine):
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Sales or other dispositions.
If you sell or otherwise dispose of the vehicle within 3 years after the date you placed it in service and know or have reason to know that it will be changed in any of the ways described above, you are subject to the recapture rules. In other dispositions (including a disposition by reason of an accident or other casualty), the recapture rules do not apply.
__________

The "ways described above" include:
__________
1) It is modified so that it can no longer be propelled by a clean-burning fuel.
2) It ceases to be a qualified clean-fuel vehicle property (for example, by failing to meet emissions standards).
3) It becomes nonqualifying property, defined earlier.
__________
Nonqualifying property is defined as:
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Nonqualifying property.
This is property used in the following ways.
1) Predominantly outside the United States.
2) Predominantly to furnish lodging or in connection with the furnishing of lodging.
3) By certain tax-exempt organizations.)
4) By governmental units or foreign persons or entities.
__________

Note also that the recapture rules do not apply to "a disposition by reason of an accident or other casualty."

Barbara