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Posted by D.D. Palmer on September 1, 2008, 3:27 pm
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My brother, who has a business that requires use of a vehicle, is
thinking about buying a hulking SUV (Hummer/Escalade/Suburban). I seem
to recall that there are rapid write off rules for businesses buying
vehicles over 6000 lbs.
Question1: What is the rule?
Question2: If he buys it in 2008, can he depreciate just a part of it
now then depreciate the remainder (if rule 1 allows it) in 2009 if and
when tax rates skyrocket under a different administration?
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Posted by Harlan Lunsford on September 1, 2008, 10:40 pm
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D.D. Palmer wrote:
> My brother, who has a business that requires use of a vehicle, is
> thinking about buying a hulking SUV (Hummer/Escalade/Suburban). I seem
> to recall that there are rapid write off rules for businesses buying
> vehicles over 6000 lbs.
>
> Question1: What is the rule?
>
> Question2: If he buys it in 2008, can he depreciate just a part of it
> now then depreciate the remainder (if rule 1 allows it) in 2009 if and
> when tax rates skyrocket under a different administration?
>
I sure have to smile at the conditions in the question #2!
Anyway, tax depreciation allows some rather creativity in figuring just
what the optimum deductions is for current and future years. For
example for a trucker who just bought one of those expensive rigs which
cost, say $80,000, there are about 80,001 different possibilities in
figuring current year's deduction. Well, maybe not that many, but
you'd be surprised.
ChEAr$,
Harlan Lunsford, EA n LA
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Paul Thomas, CPA on September 2, 2008, 11:40 am
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> My brother, who has a business that requires use of a vehicle, is thinking
> about buying a hulking SUV (Hummer/Escalade/Suburban). I seem to recall
> that there are rapid write off rules for businesses buying vehicles over
> 6000 lbs.
>
> Question1: What is the rule?
Code Section 179. It allows a current expense (accellerated depreciation)
on certain fixed assets, among them are certain vehicles.
One of the limitations of Sect 179 is business profits. So that is one
minimum hurdle to cross before thinking about Sect 179.
Another limitation is the cost of the item(s) being expensed through Sect
179. Another, spectifically related to the class of vehicle you are
referring to, is $25,000.
Basically, the first $25,000 of the vehicle cost can be taken as a Sect 179
expense. Any remaining vehicle cost is depreciated over regular rules for 5
years minimum, maybe and often most likely, it's longer than that.
Remember the business profit limitation? If his profits, taking the impact
of regular depreciation, is less than $25k, say $20k, then his Section 179
is limited to $20k.
> Question2: If he buys it in 2008, can he depreciate just a part of it now
> then depreciate the remainder (if rule 1 allows it) in 2009 if and when
> tax rates skyrocket under a different administration?
Section 179 expense is taken in the year (and only one year) that the
vehicle is purchased and placed in service.
If your brother has a business, he should have an accountant - preferably a
CPA or EA - to discuss this with.
--
Paul A. Thomas, CPA
Watkinsville, Georgia
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by removeps-groups@yahoo.com on September 2, 2008, 12:19 pm
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wrote:
> > Question2: If he buys it in 2008, can he depreciate just a part of it now
> > then depreciate the remainder (if rule 1 allows it) in 2009 if and when
> > tax rates skyrocket under a different administration?
>
> Section 179 expense is taken in the year (and only one year) that the
> vehicle is purchased and placed in service.
One is not required to use section 179, right? Taking depreciation in
later years when profits are higher and tax rates are higher makes
sense.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Paul Thomas, CPA on September 2, 2008, 1:14 pm
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> One is not required to use section 179, right? Taking depreciation in
> later years when profits are higher and tax rates are higher makes
> sense.
Correct. You are not required to elect Section 179.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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