IRS TURNS DOWN MY DEDUCTION

Discussion in 'Gen 2 Prius Main Forum' started by jezroj, Jul 6, 2006.

  1. jezroj

    jezroj New Member

    Joined:
    Apr 16, 2005
    52
    0
    0
    Location:
    Sunnyside, California
    Vehicle:
    2005 Prius
    I received a letter from the IRS telling me that the two 2005 Prius's that I had purchased can not be deducted because "... Publication 535, page 46, Deductions for Clean-Fuel Vehicle Property; Gasoline/Electric hybrid vehicles that are NOT powered primarily by an electric motor are NOT qualified electric vehicles. Your Toyota Prius is in this category and does NOT qualify".

    I remember this being an issue in late 2004, but I thought all this was straightened out ... can anyone shed some light on this.
     
  2. momfortheenvironment

    Joined:
    Mar 9, 2006
    146
    0
    0
    Location:
    Southern New Hampshire
    <div class='quotetop'>QUOTE(jezroj @ Jul 6 2006, 09:44 PM) [snapback]282324[/snapback]</div>
    I'd be tempted to call them and see if this is an error and what does qualify????
     
  3. Lola&#39;05

    Lola&#39;05 New Member

    Joined:
    Oct 9, 2005
    147
    1
    0
    Location:
    Southeastern PA
    I got the clean fuel deduction on my 2005 without any problem.
     
  4. Cheap!

    Cheap! New Member

    Joined:
    Apr 3, 2006
    1,157
    7
    0
    <div class='quotetop'>QUOTE(jezroj @ Jul 6 2006, 08:44 PM) [snapback]282324[/snapback]</div>
    You filed right!
    Under the Clean-Fuel Vehicle property, and for the hybrid deduction.
    Speak to a tax consultant!
    All you did is file for an all electric vehicle in Pub 535, page 46.
    What is wrong with them?
     
  5. wstander

    wstander New Member

    Joined:
    Jul 16, 2005
    982
    0
    0
  6. daniel

    daniel Cat Lovers Against the Bomb

    Joined:
    Feb 25, 2004
    14,487
    1,512
    0
    Location:
    Spokane, WA
    Vehicle:
    2004 Prius
    Somewhere on Toyota's web site is a pdf of a letter from the IRS stating that the Prius does qualify.

    Make sure you did not mistakenly claim an electric vehicle. And if you didn't, then appeal. Or is it possible that you can only take the deduction for one car? Might not hurt to consult a tax advisor. But before you spend any money, phone the IRS. They are very friendly. (Yes, they take money from you, but their phone service people are excellent.) 1-800-829-1040.
     
  7. naterprius

    naterprius Senior Member

    Joined:
    Mar 15, 2004
    1,843
    11
    0
    Location:
    USA
    Vehicle:
    Other Non-Hybrid
    I took the deduction in 2004 on my 2004 Prius.

    Nate
     
  8. aaf709

    aaf709 Ravenpaw of ThunderClan

    Joined:
    Apr 23, 2005
    3,841
    9
    0
    Location:
    San Diego, CA
    Vehicle:
    2005 Prius
    <div class='quotetop'>QUOTE(daniel @ Jul 7 2006, 09:51 AM) [snapback]282574[/snapback]</div>
    You're right, that sounds like that's what happened. When I used Turbo Tax, the electric vehicle deduction came up and then the hybrid deduction.
     
  9. Jim1eye

    Jim1eye Shaklee Ind Distributor

    Joined:
    Sep 10, 2005
    181
    0
    0
    Location:
    Connecticut
    Vehicle:
    2022 Prius Prime
    Model:
    LE
    <div class='quotetop'>QUOTE(jezroj @ Jul 6 2006, 09:44 PM) [snapback]282324[/snapback]</div>
    1. If they are referring you to Pub 535, is it safe for us to assume that you are seeking the deduction as a business expense?

    2. Did you prepare your taxes?

    3. Sounds like you claimed the electric vehicle deduction, not the hybrid deduction.

    The IRS should have given you the opportunity to respond, do so. Even if it means filing an amended return.

    For more info, see IRS SITE
     
  10. jezroj

    jezroj New Member

    Joined:
    Apr 16, 2005
    52
    0
    0
    Location:
    Sunnyside, California
    Vehicle:
    2005 Prius
    Thanks for all the tips, this is my second time around with the IRS, first they turned it down, we questioned why and were sent the letter I mentioned. My CPA also owns a Prius and had no problems with her deduction, we are contacting the IRS again.
     
  11. hycamguy07

    hycamguy07 New Member

    Joined:
    Feb 18, 2006
    2,707
    2
    0
    Location:
    Central Florida
    Vehicle:
    2007 Prius
    <div class='quotetop'>QUOTE(jezroj @ Jul 6 2006, 09:44 PM) [snapback]282324[/snapback]</div>
    I went throught this also in 04, ie I did not get the credit I did get it in 05 though...
     
  12. jdjeep98

    jdjeep98 New Member

    Joined:
    Jan 1, 2006
    211
    0
    0
    Location:
    Wilmington, DE
  13. Alnilam

    Alnilam The One in the Middle

    Joined:
    Jun 8, 2006
    760
    7
    0
    Location:
    Carlsbad, CA
    Vehicle:
    2006 Prius
    <div class='quotetop'>QUOTE(jdjeep98 @ Jul 7 2006, 03:05 PM) [snapback]282736[/snapback]</div>

    This page lists the deduction as $2,000. I thought I've been hearing that it should be in the neighborhood of $3150. Is this a stale form?
     
  14. bobr1

    bobr1 New Member

    Joined:
    Nov 21, 2005
    306
    2
    0
    Location:
    Portland, Oregon, USA
    <div class='quotetop'>QUOTE(Alnilam @ Jul 7 2006, 05:09 PM) [snapback]282775[/snapback]</div>
    For 2004 and 2005, it was a deduction. The rules are changed for 2006, and it is now a credit, and the amounts are calculated differently.

    - Bob R.
     
  15. Alnilam

    Alnilam The One in the Middle

    Joined:
    Jun 8, 2006
    760
    7
    0
    Location:
    Carlsbad, CA
    Vehicle:
    2006 Prius
    <div class='quotetop'>QUOTE(bobr1 @ Jul 7 2006, 05:30 PM) [snapback]282781[/snapback]</div>

    Got it. I did some further research and found the pertinent IRS notice. Thanks.

    One more tax question. Mine are complicated enough so that I've got an accountant to prepare them. (This isn't necessarily good! :unsure: ) I've recently meet the Alternative Minimum Tax. Just as an example, if I calculate that I owe the IRS $5,000 but the AMT comes out to, say, $6,000, then I have to pay the larger amount. Does this Prius deduction come off what I actually would have paid ($6,000) or off the calculated $5,000 which would mean I still have to pay the AMT and I get effectively $0 in a Prius tax break? I know my accountant probably knows but this thought just came to me.

    (I hold nobody legally responsible for their answer. Just a curious question. :) )
     
Loading...