Hi all... Thanks for all the great info. This board is great. I hope someone can help me with this tax question. I can't find the answer anywhere else. I actually bought 2 Prius's in 2003. I bought a '02 in January and an '04 in November. My '02 was totaled when someone smashed into it when it was parked on the street I was lucky enough to get an '04 and I was wondering if I could take the deduction twice (once for each purchase). Do you still have to own the car to take the deduction? Probably just wishful thinking... thanks alot, Peter Berg '04 Seaside Pearl Prius
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): __________ 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: __________ 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
