Q:

Subject: Quick question on buying a SUV for business in 2005.

Kerry,

First of all, finding your website is probably the best thing I've done online this year. Thanks for all the great information and I wish every CPA could have the same attitude and knowledge.

May I ask a quick question about Sec 179? I started a retail business this year and it is doing good so far. I am planning to buy a SUV, which will be used at least 60% for business. I understand that the 100K deduction expired. Does that mean the tax impact will now be the same no matter whether the SUV is above 6K lbs (e.g. A VW toureg) or below? How much deduction should I expect for it? (vehicle will be priced between 30K~40K)

Thanks for your help in advance.

Have a wonderful day.

A:

As I always say, you really need to be working with a tax pro to see how the tax laws and rules will affect your particular situation.

If you check my page on Section 179,  you will see that the maximum for 2005 is $105,000.  Of that, only $25,000 can be for SUVs that are over 6,000 pounds GVW. 

The maximum for vehicles under 6,000 pounds is much lower than that.  For  example, SUVs, trucks and vans weighing less than 6,000 pounds that are placed in service in 2005 have a maximum Sec. 179 deduction of $3,260 if they are used 100% for business.  Thus, the 6,000 pound threshold is still very important.

In your example, using an SUV weighing more than 6,000 that costs $35,000 and is used 60% for business, you would have a possible Section 179 deduction of $21,000 ($35,000 X 60%).  This could be limited based on the other restrictions related to Section 179.

Again, any competent tax pro should be able to help you with this in more detail than the generalities we are using here.  

Good luck.

Kerry

Follow-Up:

Thank you so much for your reply. You are just awesome.

I will definitely hire a CPA for the actual tax/accounting stuff,

But your answer helped me to save time on researching target vehicles, which is just as valuable.

Thanks again and you have a good evening.

 

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 6/09/2005 10:31:00 PM Send this post: