For some reason, I've been receiving several emails from people under the impression that the Section 179 deduction has been eliminated or will be as of January 1, 2005.  As you can plainly see on the Section 179 page on my website (which has been updated for the recently enacted new law), nothing could be further from the truth.  Whoever is spreading this myth, please stop it at once.

I can only surmise that the following exchange with an operator of a car dealer website was the product of his wishful thinking.

Q:

Whats the deal on the SUV tax loophole?
 
All the sites I read say it died as of 10/22 but my manufacturer contacts say they have had their attorneys and accountants review and they say its still good until till 12/31/04.
 
Do you know whos right?

A:

The Section 179 tax break for SUVs over 6,000 pounds does not die.

The only change is that for SUVs weighing between 6,000 and 14,000 pounds acquired after 10/22/04, the maximum Sec 179 that can be claimed is $25,000.

The actual total first year depreciation deduction can still be much more than $25,000 when combined with the amounts claimed as bonus and regular depreciation, as I covered earlier in my blog.

Q:

My manufactuer PR contacts dispute that and say their lawyers and accountants have reviewed and the full deduction (100k) is good till 12/31/04.
 
Have you heard that?

A:

Either you are misunderstanding what they are saying or they are not looking at the law properly.

The full maximum Section 179 deduction for 2004 is still $102,000.

The new law addressing how much of that $102,000 may be claimed for the cost of business SUVs was signed and enacted by President Bush on October 22.  The law clearly states that the new limit takes effect the day after enactment.  Thus, any SUV acquired after October 22, 2004 is subject to the new lower Section 179 limit of $25,000.

I have read literally hundreds of articles and discussions on this very topic over the past several months, and not a single one mentions an effective date of January 1, 2005.  Your recent email is the very first time I have seen anyone make such a claim.

Kerry Kerstetter

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 11/11/2004 03:46:00 PM Send this post: