Q:

Hello Mr Kerry M. Kerstetter,
 
My name is T***y and and I would like to thank you for the wonderful advice/information you have on your website. I have two questions if you can answer for me:
 
I am an independent contractor with no employees, 34 yrs old, have an LLC, and am thinking of setting a 419 plan- Do you recommend this.  I plan to put 41k in SEP, 3k in IRA, and rest in 419. If this is not a good plan, what other vehicles are there to save more of your income?
 
Second Question) I plan to purchase a vehicle but do not want to purchase 6000lb one. If I purchase a luxury car @ $45k is there a benefit to purchase one this year vs next year. I have heard this is the last year where one can deduct 10k and next year it will be only 3-4k. Does the vehicle have to be new, or can I purchase an old one like 2002/2003 with 18k miles?
 
Thanks

A:

T***y:

I can't advise you on the various retirement plan options in this format.  You need to work one on one with a professional tax and/or financial advisor for that.

In regard to the issue of buying a new business vehicle, there are some big differences.  The approximately $10,000 of first year bonus depreciation is only available for brand new (not used) vehicles and this will not be available in 2005 because it was not renewed by our rulers in DC. 

The other Section 179 and regular depreciation deductions are the same for used and brand new vehicles, as long as it is new to you.

I've discussed other various aspects of this in numerous recent postings.

Good luck.

Kerry Kerstetter

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/01/2004 04:50:00 PM Send this post: