[Nancy]

Note: before I forget, the dates for the 30% bonus depreciation is Sept. 11, 2001 through the end of 2004, not 9/11/04.

Mac,

Yes, if you sell the car, you must recapture excess depreciation. If you do not replace the car then that amount is taxed as ordinary income.

However, if you replace the car then that amount is an adjustment to the basis of the replacement car and is not included in taxable income.

Example:

Car originally cost $60,000. Depreciated basis is $30,000. Sell the car for $50,000 then there is depreciation recapture of $20,000 subject to taxation as ordinary income. But buy another car to replace it for $70,000. The depreciable basis of the replacement car is now $50,000.

Basis adjustments happen with like-kind exchanges, involuntary conversions and the like.

Nancy