For heavy SUVs, businesses can deduct up to $25,000 of the SUV’s cost in
the year it is purchased. Also, the rules that limit the amount of
annual depreciation allowed on passenger automobiles do not apply to
heavy SUVs. Meaning, the remaining cost of the vehicle can be written
off over five years; potentially adding up to a substantial first-year
deduction.
For example, the maximum first-year depreciation deduction for a $45,000
heavy SUV placed in service during 2005 and used 100% for business
purposes will generally be $29,000 [$25,000 expense deduction + $4,000
MACRS deduction]. The maximum first-year depreciation deduction for a
$45,000 passenger auto placed in service during 2005 and used 100% for
businesswill only be about $3,000.
A heavy SUV is a passenger vehicle with an enclosed body, built on a
truck chassis that has a gross vehicle weight rating—the manufacturer’s
maximum weight rating when loaded to capacity—above 6,000 and less than
14,001 pounds. However, a vehicle that otherwise meets this definition
is not classified as an SUV if:
It is equipped with a cargo area of at least six feet in interior
length. The cargo area cannot be readily accessible directly from the
passenger compartment, but it can be either open or enclosed by a cab.
Many pickups with full-size cargo beds will qualify for this exception,
but “quad cabs” and “extended cabs” with shorter cargo beds may not
qualify. So when you go to the dealership, be sure to pack a tape
measure.
It can seat more than nine passengers behind the driver’s seat, such as
hotel shuttle vans.
It has an integral enclosure that fully encloses the driver’s
compartment and load carrying device, does not have seating behind the
driver’s seat, and has no body section protruding more than 30 inches
ahead of the leading edge of the windshield, such as delivery vans.
For these heavy non-SUVs, the full expensing deduction ($105,000 for
2005) is available. This means that businesses will often be able to
write off the full cost of the vehicle in the year it is purchased.
As you can see, the deductions for purchasing a heavy SUV (or non-SUV)
for use in your businesscan be substantial.
Related Articles:
SUV TAX DEDUCTION LIST
SUV Tax Deduction for
Dummies
SUV Tax Deduction 2005
Section 179-SUV Tax Deduction
SUV Tax Deduction - Section 179
Pitfalls
SUV TAX Loophole |
