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The IRS has consistently held that the cost of tires for trucks, tractors and trailers is not deductible as part of the vehicle. Instead, the tires are considered to be separate assets and the cost must be depreciated over a period of time, based on the average life
expectancy of the tires.

But now the IRS provides a "safe harbor" accounting method for original and replacement tires used by trucks and other heavy-duty vehicles used by businesses. (IRS Revenue Procedure 2002-27) 

The IRS Revenue Procedure applies to:
 Light general purpose trucks.
 Heavy general purpose trucks.
 Tractor units for use over the road.
 Trailers and trailer-mounted containers.



Under the “original tire capitalization method,” purchasers can capitalize the cost of original tires and take depreciation deductions based on the same depreciation method, recovery period and convention that applies to the vehicle.

In addition, a taxpayer can write off the cost of replacement tires in the tax year they are installed on the vehicle.

 More good news: Your company does not have to wait to use the new safe harbor method. It is available for tax years ending on or after December 31, 2001. 


This article is provided as a service by: L.S. Sherman Litigation Consulting.

LSSLC is a group of complex litigation specialists helping attorneys prepare successful complex litigation through the management of detailed technical information and engagement of experienced testifying experts of unsurpassed quality.

Contact Linda Sherman: 610-642-7755

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LSSLC, LLC provides the information in this newsletter for general guidance only, and does not constitute the provision of legal advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. 

The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.