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Question: SUV Tax Law for Self employed?

Hi All,

Answer: There is a section of the code, Section 179, that provides an immediate deduction for vehicles that would otherwise be depreciated over a longer term; say 5 years.

The law changed recently relating to SUVs that weigh over 6,000lb. The IRS quickly realized that when they placed a 6,000 lb threshold on vehicles that many luxury SUVs would meet that guideline. To close the loophole, the IRS then stated that a $25,000 limit is imposed on the cost of sport utility vehicles that may be taken when utilizing the capital asset expensing election provided in IRC Section 179.

This means that any SUV with a cargo area of less than 6 feet long, that is not readily accessible from the passenger compartment, also falls under this restriction. This limits the deduction to $25,000 for these trucks over 6,000 lbs and a cargo bed of less than 6 feet.

If you’re going to buy an SUV, be aware of this new restriction. Also, it may be a good idea to determine the business use of the vehicle. If it is used for less than 50% for business, you cannot use the section 179 deduction for the vehicle.

Hope that helps. Below is a great link that describes everything.

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Kerry Kerstetter, the TaxGuru, answers question on Vehicle Max Section 179

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