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

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.

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.

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