Benefits of Tax Code 179 for Self-Employed or Business Owners

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

Lincoln: 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. Terre Johnson 5 years ago

    Are vans like the e150-350 within this category as well?

    • Author
      Michele Sanders 5 years ago

      Yes, they qualify as well. Let me know if you need a good Ford dealer. Merry Christmas.

      Jerry Reynolds “The Car Pro”
      President, Car Pro Radio Networks

  2. Stephen Smith 2 years ago

    Tax Code 179 – Still in effect for 2015?

    Please advise on most reliable & best mpg vehicle that qualifies. Willing to drive a truck, however, currently have a Honda Pilot.

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