[Nancy]

Steve,

Yes, all you are doing is accelerating the expense. But a dollar today is worth way more than a dollar five years from now, so it's of great value.

And in the case of the H2, because of its gross vehicle weight rating, it means you will see depreciation you would pracically never seen due to the personal vehicle limitation that does not apply to the H2. The limitation of $3,000-3,500 (the number changes every year and there is also special this and that..I don't know the exact number for 2002 off the top of my head) means high cost vehicle'd depreciation is so many years out the it is beyond the life of the car. While you have the right to it in future years, you just can't get there.

There is no salvage value considered in the depreciation of a car used primarily for business us. Salvage value adjustments to basis are only used for straight-line depreciation calculations. Business use cars are depreciated using the declining balance method under MACRS (Modified Accelerated Cost Recovery System). The first and last year, the depreciation is 20% of the adjusted basis. The other years it is 40%. You can see how it works in the example I posted earlier.

Nancy