title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Wednesday, March 01, 2006
 
Sec 179 Deduction

Q:

Subject: another sec 179 question
 
My husband bought a new truck for his business 7/27/05

Financed (paid) $48,194.77 with a $2,707 trade in –

Truck weighs 9200 pounds and was used 80% for business (from 7/27 to 12/31/05)

IN GENERAL – what is his section 179 deduction?

Gross sales $30316

Thanks

A:

You and your husband should be working with a professional tax advisor on matters such as this.  What you pay him/her will be a tiny fraction of the tax savings you should be able to realize.

For the Section 179 and depreciation calculation, you need to add in the sales tax you paid on the new truck to get the proper cost basis to work with.  In a rough sense, the amount eligible for Section 179 is the net cost paid after the trade-in, which would be $45,487.77 (plus sales tax) multiplied by the 80% business usage, for a net of $36,390.

The actual deduction that can be claimed on your 1040 will be limited by the amount of business net (not gross) income, including from other sources, such as W-2s. 

Your personal professional tax advisor will be able to give you more specifics.

Good luck.

Kerry Kerstetter

 

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- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/01/2006 11:08:00 AM Send this post:

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