Self-Employed & Business Owners-HEADS UP!

TIME IS RUNNING OUT to jump on board for what could be the final year of this program! If you know anyone who might qualify, be sure to send this to them, they’ll appreciate it!

I have had a HUGE response to our on-air discussion on Tax Code 179. By popular demand, our explanation of Tax Code 179:

If you are self-employed or own a business, it’s that time of year! If you want to get a HUGE tax deduction on THIS YEAR’S return, you need to buy a full-size truck or SUV before the end of the year. PLUS, with the huge rebates, and sky-high used car prices, you win all the way around!

Vehicles and other equipment are traditionally large expenditures for any business enterprise. Typically, if business property has a useful life of more than one year, the cost must be spread across several tax years as depreciation with a portion of the cost deducted each year.

There is a way to immediately receive these income tax benefits in one tax year. The provisions of IRS code section 179 allow a sole proprietor, partnership, or corporation to fully expense tangible property (new or used) in the year it is purchased and placed in service. This means that if you purchase a qualifying vehicle the last day of the year and place it in service that day, then the business miles driven that day divided by the total miles driven will be your business use percentage for determining the amount of the tax deduction for that year.

The tax law changes over the past few years have made this option more appealing by dramatically increasing the amount that can be written off. These changes that were first made in 2003 and then extended annually means that businesses can write off more of their capital expenditures through 2012.

Under current law for the year 2012, a business can expense $139,000 of capital expenditures up to an overall investment limit of $560,000. The only catch is that the expenditure has to be used greater than 50% for business use and placed in service in the current year. Generally vehicles that weigh over 6,000 lbs qualify for this revision for immediate expensing. A special $25,000 limit applies to certain SUVs. Trucks do not have this limitation. Without intervention by Congress, the deduction will decrease further for 2013 to $25,000.

In lieu of Section 179, vehicles purchased have a special depreciation allowance of 50% of depreciable basis is allowed. To qualify, the automobile must be qualified property.

Here is a list of 2012/2013 vehicles that FOR SURE qualify. There may be a few others I missed, but all these will qualify.

Audi: Q7 TDI
BMW: X5, X6
Buick: Enclave
Cadillac: Escalade including hybrid
Chevy: Silverado, Suburban, Tahoe, and Traverse
Dodge: Durango and Ram pickup
Ford: Expedition, Explorer, all F-Series pickup
GMC: Acadia, Yukon, all Sierra pickup
Infiniti: QX56
Land Rover: LR4, HSE, Sport
MKT, Navigator
Mercedes: GL 350 diesel, ML350, R350
Nissan: Armada NV, Pathfinder 4-wheel drive, Titan
VW: Touareg hybrid

MANY THANKS to Bill Caton at Caton Consulting Group for their help with this information.

  1. Alex Rozman 6 years ago

    I noticed that the Touareg hybrid will qualify but what about the TDI version (Diesel Touaregs) which all have listed GVWR ratings over 6000 lbs according to the VW website and are EPA class light trucks. I am wondering why only the hybrid is listed?

    • Jerry 6 years ago

      I am sure the TDI model will qualify as well, but check with your CPA to be sure.

  2. George Hamilton 1 year ago

    Following up on the above comments, it’s not vehicle weight it’s GVWR(gross vehicle weight rating). At least some Chevy Colorados qualify but no Tacomas. Toyota rather stupidly gives the Tacoma a 5800(and something) GVWR. One area where Toyota is not thinking of it’s customers.

  3. Thomas Storch 8 months ago

    Can you still do this for this year 2018?

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