Underwriting Depreciation from Asset Step-Up

The mechanics and options described correspond to my understanding as well. I wonder if folks retain an advisor and go through a formal purchase price allocation exercise for deals this small.

In principle you allocate the purchase price to the fair market value of assets that you acquire (in this case vehicles but it can also relate to patents, machines, real estate etc). The difference between purchase price and the amount allocated to such assets is considered goodwill. The goodwill is amortized in line with the tax amortization rules for goodwill and the other assets are amortized in line with the tax amortization rules for such other assets (in your case vehicles). The difference in amortization period makes it tempting to allocate the purchase price as much as possible to assets that can be amortized faster than goodwill. But you have to take a reasonable position to avoid lengthy and costly disputes with the IRS. If the amounts are larger, then it is advisable to allocate the purchase price to various assets in the purchase agreement. That gives you a stronger position and implies that the seller is bound to follow that as well (and reduces risk of seller and buyer taking different views that benefit each of them the most - which the IRS does not like).