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ATTENTION
BUSINESS OWNERS
ARE YOU IN THE MARKET FOR A NEW VEHICLE? DID YOU CONSIDER…..
Are
you in the market for a new vehicle? If you are, please
be certain that you give thoughtful consideration to all
of the options you have available.
As a
business owner, you are undoubtedly aware of the “luxury
auto” limitations for depreciation. Autos that cost
more than $15,300 are subject to these rules. With the
cost of vehicles these days, it appears that almost all
cars are subject to limitations.
It is
important to be aware that the “luxury auto” rules
do not apply to vehicles with a gross vehicle weight of
more than 6,000 pounds. Many SUVs and trucks fall within
this category and qualify for a tax windfall through increased
tax deductions.
The following
depreciation deductions are available for these SPECIAL
vehicles:
- Section
179 depreciation deduction-The first year bonus depreciation
for 2003 is limited to $25,000. There must be sufficient
wages and/or business income to take the Section 179
depreciation deduction.
- Additional
first year depreciation-There is an additional depreciation
for the first year of 30% of your cost reduced by any
Section 179 depreciation taken on the vehicle. This is
only available for assets purchased after 9/10/01 and
before 9/11/04. The asset must be placed in service prior
to 1/1/05.
- Regular
depreciation for the initial year would be 20% of the
net cost after deducting both the Section 179 depreciation
and the additional first year depreciation.
Example:
Assuming a five year depreciable life and half year convention:
| Cost
of SUV |
$50,000 |
| |
|
| Depreciation: |
|
| Year
1 |
36,000 |
| Year
2 |
5,600 |
| Year
3 |
3,360 |
| Year
4 |
2,016 |
| Year
5 |
2,016 |
| Year
6 |
1,008 |
Although it is impossible to develop an all-inclusive list
of eligible vehicles, here is a short list of vehicles that
may qualify:
- BMW
X5
- Cadillac
Escalade
- Chevy
Astro
- Chevy
Avalanche
- Chevy
Express
- Chevy
Silverado
- Chevy
Suburban
- Chevy
Tahoe
- Dodge
Durango
- Dodge
Ram Van
- Dodge
Ram Maxi Van
- Dodge
Ram Wagon
- Dodge
Ram 1500
- Dodge
Ram 2500
- Dodge
Ram 3500
- Ford
Excursion
- Ford
Expedition
- Ford
Econoline E-150
- Ford
Econoline E-250
- Ford
Econoline E-350
- Ford
F-150
- Ford
F-250
- Ford
F-350
- GMC
Yukon
- GMC
Safari
- GMC
Savana
- GMC
Sierra
- GMC
Sierra Denali
- Land
Rover Range Rover
- Lincoln
Blackwood
- Lincoln
Navigator
- Mercedes
ML 320
- Mercedes
ML 500
- Mercedes
ML55 AMG
- Toyota
Land Cruiser
- Toyota
Sequoia
- Toyota
Tundra
As with any tax related matters, you should ALWAYS consult
a professional tax advisor before undertaking such a purchase.
They will be able to assess your personal tax situation to
maximize your deductions and minimize your taxes.
Should
you want to discuss this matter in more detail please contact
us.
Please
call us if you would like to discuss this further.
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