Hello there again, the reason the depreciation is so high is that the Stimlulus package contained a provision for an additional 50% depreciation for capital equipment with a lifespan of less than 20 years. A tractor they consider to have a life span of 7 years I'm not sure about the trailer. I know you are using Turbo Tax so there is little chance that you can make a large mistake in that area. Give your brother-in-law what he is entitled to, which comes to about 65% of what the price of his tractor and trailer. If you don't take it you are not giving him the credit he needs - if it causes him to have a loss carry it over to offset next year. If the IRS wants to give it too you take it - they aren't generous souls and believe me if he owed it they would be on his case in a heart beat.

Linda

Normally a class 8 tractor is depreciated over a 3 year term. I have read that it can be depreciated over a 4 or even 5 year term (5 years for a "truck" according to IRS regs).

As Linda stated there is an exception available under the stimulus package that permits a person to write off the entire amount in 1 year but this may cause some serious repercussions in later years when you no longer can offset your earnings with the depreciation from your tractor.

You may want to hire a tax professional to be sure you are getting the best possible advice. A competent CPA will help guide you through purchases as well as current regs to limit your tax exposure.