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SUV Under 6,000 Pounds
Q:
Subject: section 179Dear Sirs,I know this is a subjuect that you've probably grown tired of years ago but I must ask. I am buying a used SUV(Ford Expedition) I know it says the vehicle only has to be new to you but what if the vehicle does not weigh 6,000lbs? The vehicle is a 1999 model and the price is $10,000. I would like to make this purchase before the end of the year to put on my taxes for 2006. Thank you.
A:
This is the exact kind of issue you should be discussing with your own personal tax professional. However, for the benefit of others, I'll explain a few things.
Most people don't have a clue where the 6,000 pound issue originated. Starting with a law passed by our rulers in 1984, the depreciation deductions (including Section 179 expensing) for vehicles were severely limited because so many big-mouths were going around bragging about buying and fully depreciating $75,000 cars every three years. That is why the allowable depreciation for vehicles is so low, currently only $14,160 over five years for a 100% business vehicle.
Back with that law in 1984, there was a need to distinguish between regular passenger vehicles, which were subject to these new luxury car limits, and utility vehicles that were supposedly not being abused as much. The break point was a gross vehicle weight of 6,000 pounds or more. Any business vehicle weighing more than that was not subject to the luxury car limits and the full cost of the vehicle was eligible for depreciation over five years and the applicable Section 179. This is basically what we still have today.
In your case, with an SUV weighing less than 6,000 pounds, you would have to use the normal vehicle depreciation schedule, which allows only a $2,960 first year depreciation deduction, prorated by the business percentage.
Again, your personal professional tax advisor can explain how this affects your particular situation in more detail.
Good luck.
Kerry Kerstetter
Labels: 179
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/22/2006 04:06:00 PM Send this post:
