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Thread: Can anyone explan a Section 179 deduction for a truck ?

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    Senior Member BigDanS's Avatar
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    Can anyone explan a Section 179 deduction for a truck ?

    I am looking into a new truck and I have been reading about the Section 179 deduction for business, for which I qualify.

    I understand the $25,000 deduction limit on most vehicles, but it appears I can deduct the whole amount if it is over 6000 lbs GVWR? Is this true if I finance or only if I pay it all up front?

    The math looks something like this if I am right...

    $40,000 vehicle
    $10,000 down payment from vehicle sale

    $30,000 out of pocket acquisition cost / financed

    $13,200 tax benefit / tax shield from deduction

    $16,800 net cost after tax shield and down payment year one

    Finance $30,000 over five years $566 per month, with an interest deduction of $1377, and an annual interest tax shield of $455.

    That makes the net payment about $530 a month after tax shield. $31,800 in payments.

    Final math

    $40,000 cost
    -13,200 first year depreciation tax benefit
    $26,800 cost after tax benefit



    First does a pickup truck qualify ( specifically a 4wd Tundra ) for the up front deduction and what happens if you sell it prior to the 5 year period?

    D
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    Senior Member Varmintmist's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    https://www.irs.gov/pub/irs-pdf/p946.pdf

    I think if you buy it outright and are using it 100% for biz, you can take the 179 for the full amount in the year of purchase. IF you are 80% then you take the biz use percentage. If you are financing something under 500,000.00 the 179 doesn't carry over because it doesn't go over the limit. If it is over 500K you can take it over as a qualified deduction for the next year. Looks like 179 is there for a first year depreciation, so that if you buy X for 10,000 outright you don't have to write a sced to get the depreciation back 500 bucks at a time over 10 years.

    As to qualify, a larger than 6' storage area separated from the cab, used 51% or more for biz should qualify.


    Not being a tax pro and only after a quick read, not buying outright you are going to be doing a std depreciation sced over the life of the loan or period of use.

    Re edit.. Unless you get a reg cab, 25K max.

    Sport Utility and Certain Other Vehicles


    You cannot elect to expense more than $25,000 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 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,000 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.
    Last edited by Varmintmist; 05-18-2017 at 07:04 PM.
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    Senior Member BigDanS's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    However, the $25,000 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.
    I think the "or" means one or the other. A Tundra has a 6'6" bed separte from the cab and not readily accessible.

    D
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    Senior Member Jermanator's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    I personally have found the standard mileage deduction to be a better deal for me, even with a new vehicle but we put on a butt ton of miles.
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    Senior Member BigDanS's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Jermanator View Post
    I personally have found the standard mileage deduction to be a better deal for me, even with a new vehicle but we put on a butt ton of miles.
    I own two vehicles, and in the past 12 years I have put less than 100,000 miles total on them, about 8500 a year.

    D
    "A patriot is mocked, scorned and hated; yet when his cause succeeds, all men will join him, for then it costs nothing to be a patriot." Mark Twain
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    Senior Member Make_My_Day's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Jermanator View Post
    I personally have found the standard mileage deduction to be a better deal for me, even with a new vehicle but we put on a butt ton of miles.
    I thought the 179 deduction was for depreciation purposes, as opposed to the Standard Mileage deduction which is more like yearly usage of the vehicle.
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    Senior Member BigDanS's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Make_My_Day View Post
    I thought the 179 deduction was for depreciation purposes, as opposed to the Standard Mileage deduction which is more like yearly usage of the vehicle.
    Milage allows you to write off at a standardized rate but not take deductions. I think this year it is $0.565 per mile. In a 20,000 mile service year that's $11,300 and is inclusive of maintenance, insurance, depreciation, etc. if you use your personal vehicle for work.

    If you buy a $40,000 work vehicle ( and you have to have made more than $40,000 in profit to do this ) and it is more than 6000 lbs GVWR, is 100 % used for business and meets the IRS requirement you can write off the entire amount up to $500,000 in cost in that year, plus expense insurance, maintenance, fuel , etc. So $50,000 write off year one, plus 1000 gallons of fuel at $2.50 = $2500 plus insurance$2000 plus $500 year one maintenance = total year one write off of $55,000 , and you would not pay $18,000 in taxes on that $55,000 deduction.

    D
    "A patriot is mocked, scorned and hated; yet when his cause succeeds, all men will join him, for then it costs nothing to be a patriot." Mark Twain
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    Senior Member Varmintmist's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Integral would be a van.

    Since you are not buying the vehicle in the same year, I am pretty sure the IRS is not going to give you a full value depreciation on it. If you pony up and pay with a check, then your #'s work. Other than that, you are going to write a regular depreciation schedule out.

    Jerm. This isn't a mileage deduction, it is a deprecation. 179 allows you to write off the entire depreciation in a single year. EX, My place is considered a tree lot, I can write off some things as farm use, chainsaws. I buy a saw, I use the saw here, I can take 100% of the cost off the saw over 5 years.
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    Senior Member Jermanator's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Varmintmist View Post
    Jerm. This isn't a mileage deduction, it is a deprecation. 179 allows you to write off the entire depreciation in a single year. EX, My place is considered a tree lot, I can write off some things as farm use, chainsaws. I buy a saw, I use the saw here, I can take 100% of the cost off the saw over 5 years.
    I thought that was included as part of the mileage deduction. I didn't realize you could also write off depreciation of the vehicle. And if I buy a saw, I just write the whole damn thing off at once. Heck, sometimes I buy saws that I don't even know I own with 3 other authorized users on my credit cards.
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    Senior Member cpj's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Jermanator View Post
    I thought that was included as part of the mileage deduction. I didn't realize you could also write off depreciation of the vehicle. And if I buy a saw, I just write the whole damn thing off at once. Heck, sometimes I buy saws that I don't even know I own with 3 other authorized users on my credit cards.
    Make me a user. You'll have a new milling machine and lathe to write off.
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    Senior Member Varmintmist's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Jermanator View Post
    I thought that was included as part of the mileage deduction. I didn't realize you could also write off depreciation of the vehicle. And if I buy a saw, I just write the whole damn thing off at once. Heck, sometimes I buy saws that I don't even know I own with 3 other authorized users on my credit cards.
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    Moderator Wambli Ska's Avatar
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    Quote Originally Posted by Jermanator View Post
    I thought that was included as part of the mileage deduction. I didn't realize you could also write off depreciation of the vehicle. And if I buy a saw, I just write the whole damn thing off at once. Heck, sometimes I buy saws that I don't even know I own with 3 other authorized users on my credit cards.
    Not 100% sure since my accountant does all our taxes but I do believe it's one or the other.
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    Re: Can anyone explan a Section 179 deduction for a truck ?

    I hire an accountant so I may or may not be correct and a farm may be different than your business but I have made purchases and wrote them off 100% in the year of purchase even if it was financed. You will have to claim income if you sell something you have depreciated if it sells for more than the remaining value on your depreciation table. I would suggest a talk with an accountant to make sure it is going to work like you want it to.

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