i went into my tax guy yesterday. lovely.

so... i'm going through a little change up in what i do on a daily basis. i have always been a w2 employee with no real opportunity to set up any business and have any deductions against it.

this year, i have quit my w2 job and am going to spend some time building some homes that i will own. i will do this through a business. after my visit with the tax guy... it hit me all of the sudden... what is going on with the full deduction to 6k# trucks? wasn't there some kind of modification to that code this year?

if i bought my truck this year and i have a business, what can i deduct? if i can deduct the entire thing.... then i didn't buy enough truck... i should go trade in for new :ro) .

WHAT IS THE RULE TO DEDUCT? (and yes, i will talk to my tax guy, but i believe that a collection of people is always smarter than any single expert - that's why i'm asking the forum - so i can be well informed when i do talk to him).

thanks.

If you own a business and use the truck for the business "only" then you can depreciate the value of the truck over a 5 year time line.
You can deduct any fuel bought for the truck, any repairs, and maintence, any registration fees, insurance, and property taxes. Basically any expense incurred while that truck is being used as a tool for the business.

If you use the truck 50% for work and 50% for personal then you can only deduct 50% of those cost's or what ever percentage you use it for work only.

there is a 'section 179' deduction election, where under certain circumstances, a truck with gvwr > 6k# the buyer could deduct 100% in year one up to $100k. it was designed to spur businesses to buy trucks such as contractors etc... of course attorneys and such were able to buy bmw x5's and caddy escalades and take the deduction. they changed it in october '04, and i'm wondering what the particulars of the changes are. it was changed with very little fanfair in washington, because the mistake was an embarrasment for the folks who designed it in the first place.

i think i found some information.... in fact... i found it on a gm website as part of their marketing!!! it looks like the main change is that the max amount was changed from $100k to $25k. unless it is a pickup truck with a bed > 6ft long.

see text:
<TABLE cellSpacing=3 cellPadding=3 width=689 align=center border=0><TBODY><TR><TD width=677>Tax Code 179 Highlights & Year End Reminder

</TD></TR><TR><TD>Business Customer Tax Deduction/Depreciation

In addition to existing strong GM incentives, there are potentially great year-end tax deduction/depreciation opportunities for your business customers outlined below. Hopefully this information will help you have a strong finish to the 2004 calendar year.

Tax Highlights


The tax code (IRC §179) now allows a business deduction up to $25,000 (was $100,000 until Oct. 22, 2004) of the value of an SUV with a GVW above 6,000 pounds in the year the vehicle is put in service plus "bonus" and regular depreciation.
For pickups with a bed length over 6 feet and qualified vans the IRC §179 deduction remains $100,000 for an additional two years (until December 2007).
Qualified vans include vehicles with seating capacity of more than 9 persons behind the driver or has an open area not readily accessible by the driver or does not have seating rearward of the driver's seat and no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Important Note - Trucks (GVW over 14,000 pounds) are exempted
Depreciation


In addition to the IRC §179 deduction, depreciation is accorded professionals and business owners. Moreover, through December 31, 2004, bonus depreciation rules allow an additional bonus depreciation deduction from
30% to 50% of the qualifying property's cost.
Summary


The American Jobs Creation Act of 2004 cut the "Hummer Loophole" from $100,000 to $25,000.
First $25,000 of certain SUV's used by professionals and small business owners in their business can be immediately expensed.
Most importantly, through December 31, 2004 the bonus depreciation rules allows a "Bonus" deduction of up to 50% of the cost of these SUV's.
Most (but not all) Pick-ups and qualified vans continue to enjoy the favorable expensing rules ? for an additional two years!
Professionals and small business owners should consult their tax advisor to confirm their deduction and depreciation benefits.

SUV Tax Code 179 Year End Reminders SUV Promotion and Tax Deduction/Depreciation

Business Choice - SUV's

As a reminder select 2004 /2005 model year GMC and Chevrolet SUV's
delivered between October 4, 2004 and December 31, 2004 are eligible for the 2005 GM Business Choice program. Customers who purchase or lease an eligible SUV can take advantage of Tools of the Trade ? $500 Lowe's gift card or Business Manager - $500 credit on an approved GM Business Card. For complete details please reference administrative message 05-36EA-1.

In addition to strong incentives, there are potentially great year-end tax deduction/depreciation opportunities for your business customers outlined below:

Tax Highlights


The tax code (IRC §179) now allows a business deduction up to $25,000 (was $100,000 until Oct. 22, 2004) of the value of an SUV with a GVW above 6,000 pounds in the year the vehicle is put in service plus "bonus" and regular depreciation.
For pickups with a bed length over 6 feet and qualified vans the IRC §179 deduction remains $100,000 for an additional two years (until December 2007).
Qualified vans include vehicles with seating capacity of more than 9 persons behind the driver or has an open area not readily accessible by the driver or does not have seating rearward of the driver's seat and no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Important Note - Trucks (GVW over 14,000 pounds) are exempted
Depreciation


In addition to the IRC §179 deduction, depreciation is accorded professionals and business owners. Moreover, through December 31, 2004, bonus depreciation rules allow an additional bonus depreciation deduction from
30% to 50% of the qualifying property's cost.
Summary


The American Jobs Creation Act of 2004 cut the "Hummer Loophole" from $100,000 to $25,000.
First $25,000 of certain SUV's used by professionals and small business owners in their business can be immediately expensed.
Most importantly, through December 31, 2004 the bonus depreciation rules allows a "Bonus" deduction of up to 50% of the cost of these SUV's.
Most (but not all) Pick-ups and qualified vans continue to enjoy the favorable expensing rules ? for an additional two years!
Professionals and small business owners should consult their tax advisor to confirm their deduction and depreciation benefits.

</TD></TR></TBODY></TABLE>

You might stand up better in a audit if you deduct (lost track of the amount per mile since I retired) only the allowed charges per mile for all miles driven in conducting your business since it sounds like the vehicle is going to be used for business and personal reasons. Check with someone who gives tax advise for a living to insure you are not getting onto thin ice.

When I bought my truck ('02) you could write off 20K that tax year, so my $40K dually only cost me 20K:ro) I'm not exactly sure of all the legals, but I was going to be paying in 20K to uncle sam anyway. So if your not going to be paying in 20k then I am not really sure how that works, you may have to do a little research with other CPA's.

If you have 2 vehicles, deduct 100% on the most expensive, and list the other at ~25% business, 75% personal.

Remember that depreciation taken on a bussiness assett is recovered by Uncle when the asset is "Traded" or other wise disposed of, ( defering tax's to a later date).

Section 179 deductions are recovered by Uncle or a portion there of, when the assett is not held for the Full depriciable period allowed.

Ask your accountant. (Trouble is that you need to learn on your own to know if they are doing all they should be.)

Bene there, done that.

Idahofox

Just because you can take a large deduction the first year dosent mean it's best to do so, remember if your paying a 5 year loan on the truck and you get to years 4 and 5 you wont have any deductions and will be paying the monthly payment with taxable money.

And idaho is right once the truck is fully depreciated, when it comes time to sell it you will be paying a capitol gains tax on the selling price. And I think that counts for trading it in too but I'm not sure.

That was the main incentive for buying my '05 Sierra. 100% tax write-off! I might have to add a few more to the fleet by the end of 2007 :)