Q-1:

Subject: Section 179 deduction for "USED" SUV over 6000 lbs.

 

I have received information from my tax consultant who is not as versed in the business tax laws as I wish. I have just started my own consulting company and need to replace my old 1990 Jeep with something a bit more practicle for doing buisiness. I cannot afford a new $45,000 SUV (over 6000 lbs I know!) but would like to buy a clean SUV that's got a couple of years on it for a lot less. Your webpage news says as long as the SUV would be new to me it would qualify for the Section 179 deduction. I intend to buy something under the $25,000 mark and over 6,000 lbs. Would I be able to do a 100% writeoff this 2006 tax year???? This issue of a used vehicle qualifying has not been completely or clearly answered anywhere I can find on line and I need to go buy something shortly. I really need your "yes" or "no" on this one.

Thank you,

A-1:

I'm not sure why you're so confused.  The Section 179 deduction never required the asset to be brand new.  Some other kinds of first year bonus depreciation did have such a requirement; but Sec. 179 never did.

Assuming you buy an SUV weighing more than 6,000 pounds, you would then need to multiply its cost by the business usage percentage based on miles driven during 2006 to figure how much you can claim under Sec. 179, up to the $25,000 limit for SUVs.

Good luck.

Kerry Kerstetter

Q-2:

Kerry,

Wow, that is about the fastest response I've ever had to ANY e-mail!!

Your answer makes it clear, used is okay. Too bad I can't wait until Dec 30th and use the vehicle 100% for work. I estimate I'll be using it about 60-70% for business. That's pretty simple math. What is this about a "bonus 30% deduction"??

A-2:

The bonus depreciation is no longer available.  When it was, it only applied to brand new business assets; so a used SUV wouldn't qualify.

It sounds like you really need to be working with a professional tax advisor to address issues such as these rather than floundering around on your own.  Taxes are too messy and complicated to try to handle on your own.

Good luck.

Kerry Kerstetter

 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/25/2006 11:35:00 AM Send this post: