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Old 10-28-2017, 03:13 PM
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Section 179 $25,000 SUV Deduction

Hello and thank you for such a great tax resource.

I purchased a used SUV for $25,000 this year.
I will use it 100% for business use this year.
Next year and the following years I may use it for business 75% to 85% of the time.

What will happen if I take the full $25K Section 179 SUV deduction this year; and then... Next year I use it only 80% for business use?

Will I then owe taxes?

Please advise,

BH Realty



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Old 10-30-2017, 07:11 AM
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What will happen if I take the full $25K Section 179 SUV deduction this year; and then... Next year I use it only 80% for business use?========>nothing happens; You need to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year the business use drops to 50% or less, then, in this case you must include the recapture amount as ordinary income in Part IV of Form 4797. If the used suv for which a Sec. 179 expense deduction was claimed ceases to be used more than 50% in business at any time before the end of the property?s recovery period, partial recapture of the deduction is required

Will I then owe taxes?=====>no; only if you sell, exchange, or otherwise dispose of section 179 property, then, you may have to treat all or part of the gain as ordinary income.



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Old 10-30-2017, 07:14 AM
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note;You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. You also increase the basis of the property by the recapture amount.



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Old 10-30-2017, 02:09 PM
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Can you do a 1031 Exchange and a Section 179 together?

Thank you so much!

May I 1031 exchange a Section 179 SUV?
And if so, what will be allowed tax write offs &/or Tax liability...

In October 2017 I bought a $25,000 used SUV; (100% for business use, and I plan to take a Section 179 deduction for $25,000 on my 2017 tax return); and then...

In January of 2018 , can do a 1031 exchange if trade I it in for a $45,000 used SUV (Used 100% for business in 2018);

Would I also be able to write off the additional $25,000 out of of pocket ($45,000 purchase price minus the approximate $20,000 trade in value of the original SUV) as a Section 179 Deduction?

Thank you,

BH-Realty



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