Underwriting Depreciation from Asset Step-Up

November 23, 2021
by a searcher from University of Pennsylvania - The Wharton School in Portland, OR, USA
Assuming that you are executing an asset-sale, which allows for a full step-up in value, what are the implications of this on how the depreciation is underwritten? For example, if you buy a blue-collar trade business (plumbing) for $1mm, and the company's main assets are vehicles, can you depreciate the entire $1mm dollars over a period, or do the standard limits for vehicle depreciation schedules still apply?
Please feel free to comment with recommended tax advisors!
Thanks!
from Erasmus University Rotterdam in Philadelphia, PA, USA
from The University of North Carolina at Chapel Hill in Cornelius, NC, USA
As I understand the 2017 tax cut and jobs act, you can depreciate in 1 year 100% of trucks, SUVs, and vans that are used >50% on the business. Granted, for a $1m company, that is likely not financially sound to depreciate the full amount but you basically have no limit (At least until 2023 when the provision in the bill expires). Would welcome to hear anyone's experiences otherwise of course!
Also interested to hear what others think here and if there are other recommended advisors. Came across this one recently with a good explanation: https://gscpa.com/how-much-can-businesses-deduct-for-vehicles-placed-in-service-in-2019/