Working on sole proprietor’s 2024 return.
Looked at 2023 return (completed by taxpayer) to see assets - noticed a pickup truck may have been incorrectly classified as a Class 10.1 asset, when it likely should have been Class 10.
I question first how it is used.
Are they in the business of transporting passengers 90%+? Class 10
Are they hauling goods 90%+? Class 10
Are the moving equipment to the job site 90%+? Class 10
If only to drive to and from locations and are not moving anything, then it could be Class 10.1. Could still be 10.1 if they are doing any of the above on a very limited basis.
The taxpayer does not transport passengers or goods. He is an HVAC technician who works alone. I believe he is moving tools and equipment to the job site. Would that make it clear cut as Class 10?
This is exactly what I thought would happen when one of my client started Uber in 2024. I didn’t know if TX would allow me to enter a number more than the UCC in the first year, I was thinking, just enter a figure equal to UCC in the first year if it doesn’t allow me to do that, for the recapture, and then on the S3, that’s where I enter the actual proceed and actual capital cost for the capital gian.
I wasn’t going to think about it when it happens, but at the time, I was only thinking about what would happen if he changes the vehicle, I am thinking CRA would use whatever ruling to their favor. So it would make senses if there is no recapture or terminal loss, as the replacement property rule would kick in
In Reply To
[ Profile - iain.fyffe - protaxcommunity.com | iain.fyffe ]
May 20
It has nothing to do with the replacement property rule, it’s the rules for class 10.1 specifically. It doesn’t behave like other classes.
