| IRS offers huge Tax Breaks in 2008 for buying an SUV whose weight exceeds 6,000lbs!
If you are considering purchasing a new SUV (whose weight exceeds 6,000 lbs) for the tax year 2008, well, now is the time to purchase it as the IRS offers incredible tax breaks up until December 31, 2008! Lets say you are going to buy a new SUV for $50,000 before the current 2008 year end, and the SUV meets the IRS statutory weight requirement of >6,000 lbs, then here are the tax write-offs available as shown below;
1. You are entitled to writeoff/depreciate $25,000 (A) of the initial cost in the first year.
2. An amount equal to 50% of the balance of the cost $25,000 can be claimed as an additional BONUS depreciation, that is an additional
$12,500 (B).
3. The remaining balance of the cost, that is $12,500 can be depreciated over 5 years which will result in an additional $2,500 (C) as regular depreciation.
Thus, in the tax year 2008 the taxpayer can actually depreciate a total of $40,000 in the tax year 2008 {sum of (A) + (B) + (C)} for purchasing an asset of $50,000!!!
Of course, the purchase of the SUV must be for a NEW SUV and it must be used 100% for business. If there is a personal usage of less than 50%, the depreciation is reduced accordingly. However, if the personal usage exceeds 50%, there would be a hit to the taxpayer who would face recapture provision which apply to both the bonus depreciation and the special expensing allowed, these would result in taxable income to the taxpayer.
It appears that the new Congress will definitely look into this tax loop hole and amend the first year write-offs, but it seems that this may not make it into law prior to 2008 tax year.
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