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Old 11-03-2013, 07:59 AM
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Need advice on Tax deduction for new vehicle Purchase

Hello! I am hoping to get some advice related to purchase of a vehicle in NJ.

I'm a business owner considering the purchase of a new vehicle with GVWR > 6000 lbs before Dec 31st 2013.


The price of this vehicle is ~64K. Can you let me know if my first year deduction calculation for 2013 is correct?

Deduction amount = 25,000 [for section 179] + (64,000-25,000) x 50% [for first year bonus depreciation
= 44,500.

Am I missing something here? Thanks in advance for your help!


Thanks!



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Old 11-04-2013, 02:02 AM
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Originally Posted by cloaked View Post
Can you let me know if my first year deduction calculation for 2013 is correct?

Deduction amount = 25,000 [for section 179] + (64,000-25,000) x 50% [for first year bonus depreciation
= 44,500.

Am I missing something here? Thanks in advance for your help!

As you can see, special depreciation rules apply for autos and trucks that are different from depreciation rules applicable to other fixed assets. Generally, auto and truck depreciation is dependent on whether the vehicle is considered a luxury auto, light van, light SUV, light truck, heavy SUV or heavy vehicle (excluding SUVs). In your case, as its GVWR > 6000 lbs (excluding SUVs and trucks with beds less than 6 feet in length), no luxury automobile depreciation limits are placed on that vehicle.Bonus depreciation may be taken for 50% of the vehicle’s purchase price, if the vehicle is purchased new.A Section 179 deduction may be taken for the remaining 50% of the heavy vehicle’s purchase price (subject to certain Section 179 limitations).So, up to $25K of the cost of vehicles rated between 6K lbs GVWR and 14K lbs GVWR can be deducted using a section 179 deduction. First year bonus depreciation (50%, new vehicles only) ($19.5K;$39K*50%), so $44.5K First year MACRS (in the case of HY convention, NOT mid –quarter convention)depreciation ($3.9K;20%*$19.5K)
•Remaining purchase price depreciated over 5 years $ 15.6K
•Total first year expense $48.4K;$25K+$19.5K+$3.9K



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Old 11-04-2013, 07:05 AM
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Originally Posted by Wnhough View Post
As you can see, special depreciation rules apply for autos and trucks that are different from depreciation rules applicable to other fixed assets. Generally, auto and truck depreciation is dependent on whether the vehicle is considered a luxury auto, light van, light SUV, light truck, heavy SUV or heavy vehicle (excluding SUVs). In your case, as its GVWR > 6000 lbs (excluding SUVs and trucks with beds less than 6 feet in length), no luxury automobile depreciation limits are placed on that vehicle.Bonus depreciation may be taken for 50% of the vehicle’s purchase price, if the vehicle is purchased new.A Section 179 deduction may be taken for the remaining 50% of the heavy vehicle’s purchase price (subject to certain Section 179 limitations).So, up to $25K of the cost of vehicles rated between 6K lbs GVWR and 14K lbs GVWR can be deducted using a section 179 deduction. First year bonus depreciation (50%, new vehicles only) ($19.5K;$39K*50%), so $44.5K First year MACRS (in the case of HY convention, NOT mid –quarter convention)depreciation ($3.9K;20%*$19.5K)
•Remaining purchase price depreciated over 5 years $ 15.6K
•Total first year expense $48.4K;$25K+$19.5K+$3.9K
Many Thanks!



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Old 11-04-2013, 07:06 AM
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Many Thanks!



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