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Old 03-31-2015, 11:48 AM
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Im self employed. I bought a new service van used exclusively for my business. Can I deduct the full purchase price of the vehicle ?

Im self employed. I bought a new service van used exclusively for my business. Can I deduct the full purchase price of the vehicle ?



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Old 03-31-2015, 07:29 PM
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It deepens; The IRS makes provisions for vehicle costs to be deducted as a legitimate business expense. Yet many business owners are ignorant about the tax handling of vehicle expenses and end up either paying too much tax or sending a red flag to IRS auditors.


Section 179 of the IRS code allows for special handling of certain capital expenses (including the acquisition cost of a business car or truck). Under Section 179, it's possible for some capital expenses to be completely deducted in the year of acquisition.Section 179 lets you deduct the full amount of a purchased, leased or financed vehicle in the year of acquisition. Instead of depreciating the purchase over several years, you can deduct the full amount from your gross income in a single tax year.
The IRS clearly limits Section 179 vehicle deductions to the year the vehicle was placed in service regardless of whether it was placed in service for personal or business use. To qualify as a Section 179 vehicle, your car or truck must be used for more than 50% business purposes. If you use it for more than 50% but less than 100% business use, your Section 179 deduction will be prorated.
Remember,vehicles with a gross weight of 6k pounds or less are subject to IRS Luxury Auto Rules; Granted higher depreciation limits than other luxury vehicles, certain trucks, vans and SUVs that are 6,000 pounds or less but are built on a truck chassis may take a slightly higher bonus depreciation. Their depreciation limit in 2013 is $11,360; if you elects not to apply for the bonus, the limit for the truck/van is $3,360. An exception to bonus depreciation limits are SUVs that are heavier than 6,000 pounds but less than 14,000 pounds. For these vehicles, you can deduct the full allowed bonus depreciation amount. This can be deducted on top of an IRS Code Section 179 deduction for heavy SUVs, up to $25k. Other heavy vehicles that get unrestricted Section 179 deductions are certain full-size pickup trucks, cargo vans and shuttle vans.



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