If you purchase an extended warranty for an auto used for business purposes, the cost must be deducted over the life of the warranty. Take the full cost and divide by the number of months in the warranty period. Multiply the number of months the warranty was in effect for the year by the monthly amount.
For example: You purchase a 2-year extended warranty on September 1. In the first year, you can only deduct 4 months of the total cost of the warranty. In year 2, 12 months of the cost can be deducted. If the auto isn’t used 100% for business, you can only deduct the portion that applies to the business.