Section 179 of the tax code permits businesses to write off deductions associated with the purchase of SUVs and heavy vehicles used for business purposes.
According to IRS Section 179 Deduction:
You cannot elect to expense more than $25000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets roads or highways that is rated at more than 6000 pounds gross vehicle weight and not more than 14000 pounds gross vehicle weight. However the $25000 limit does not apply to any vehicle:
- Designed to seat more than nine passengers behind the driver’s seat
- Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment or
- That has an integral enclosure fully enclosing the driver compartment and load carrying device does not have seating rearward of the driver’s seat and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
A substantial additional deduction is available this year on heavy SUV purchases. This addition allows the taxpayer to take 50 percent bonus depreciation on top of the $25000 Section 179 deduction. For example if a business purchases an SUV costing $65000 meeting the above requirements and placed in service before the end of 2013 the first deduction that applies is the $25000. $40000 remains of the cost half of which ($20000) qualifies for the bonus depreciation deduction for 2013. A regular deprecation deduction of 20% may also be applied to the remaining amount which would be an additional $4000 deduction. If the SUV is used only for business purposes the write off for 2013 will be $49000.
Business usage must amount to at least 51 percent of the time to be eligible for the bonus depreciation deduction. If the vehicle is used for personal driving the overall deduction will be reduced by the percentage of personal use.
If you are questions about deductions that your business may qualify for contact us at Lindemeyer CPA.