Tesla Model X 6,768 Lb. GVWR, Qualifies For $25K Business Tax Break

OCT 8 2015 BY ERIC LOVEDAY 61

Tesla Model X

Tesla Model X

Section 179 of the tax code states that vehicles with a gross vehicle weight rating (GVWR) of over 6,000 pounds are eligible for an immediate business tax deduction of up to $25,000. Basically, the deduction means that one doesn’t have to pay taxes on the $25,000 amount (a savings of up to ~$13,000).

There’s been much speculation as to whether or not the Tesla Model X would qualify for this deduction.

Turns out the Model X does have a GVWR of well over 6,000 pounds (6,768 pounds, actually), so yes it does qualify.

Here’s the VIN to prove it:

Model X VIN

Model X VIN

Further confirmation comes via Tesla spokesperson Alexis Georgeson who told AutoblogGreen the following:

“Yes, the curb weight of Model X is 5,441 lbs. So we expect the GVWR to exceed 6,000 lbs. This means a Section 179 deduction could be taken for to up to $25,000 of the purchase price.”

The vehicle must be used for transport by the business. Beyond that, the requirements/rules are as follows, according to the IRS:

Sport Utility and Certain Other Vehicles

You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,000 limit does not apply to any vehicle:

Designed to seat more than nine passengers behind the driver’s seat,

Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

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61 Comments on "Tesla Model X 6,768 Lb. GVWR, Qualifies For $25K Business Tax Break"

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Tim

That’s a pretty significant development. I wonder if Tesla had this in consideration when determining what to develop after the Model S.

Jaj

If you wonder if Tesla planned to comply with the GVW rule, consider the MB ML and the BMW X5
— they just make the 6000 threshold — whereas the Tesla is over that substantially. Just saying.

So if someone expenses $25,000 of the $100,000+ purchase on their business taxes the first year, at about a 40% tax rate (25% income tax and 15% self-employed tax) that results in a tax savings of $10,000, essentially providing the purchaser with a 10% discount assuming it is used for business.

If the $25,000 limit gets removed (reinstating the hummer tax loophole), then the full purchase price would be subject to that type of accounting, saving people between 40 and 50% on the price of the Tesla Model X, assuming they pay enough in taxes to have that much tax liability.

This is just accelerated depreciation though. You still get to write off the price of the car, just over a longer period of time.

FWIW, I expect a lot of well-to-do realtors to buy these vehicles to chauffeur their clients around.

sven

And a lot of well-to-do doctors, dentists, lawyers, etc. will buy the Model X to commute solo to the office in the HOV lane.

sven

Actually scratch that, since the Hummer Loophole became popular and abused, the IRS has cracked down and determined that commuting is not a business use.

http://www.irs.gov/publications/p534/ch03.html

Get Real

Its ok sven, you couldn’t have benefitted anyways!

So… Model X is to BEV as Hummer is to ICE.

🙂

ModernMarvelFan

Uber it.

Boy Sven, you really have learned JUST enough about a LOT of things to be DANGEROUS. I replied to your response of my post later on down in the commentary, but then I come back and see this. Wow! Commuting miles have NEVER been deductible- REGARDLESS of people’s perception of this hummer deduction nonsense. I fully digested the tax code (for small business) prior to writing my computer program back in 1993 and commuting has CONTINUED to be defined as those miles before your first business stop and after your last business stop for the day. The LOOPHOLE here, one that my CPA brother in law tried to get me to use (but I consider it underhanded and deceitful) is to get a POST OFFICE BOX close to your house. You simply stop there at the start and end of your business day and viola, lots of extra business miles now left for deduction to your REAL place of business. And I know the situation has been the same for decades because my daughter is a corporate employee who visits many stores during a business day. Her employer cuts off reimbursement before the first, and after the last store visit.… Read more »
ffbj

Useful information but a bit TMI.

Proton

The cost of commuting to work from the commuter’s home has never been a tax deduction–only commuting between two or more business locations can be exspensed (deducted).

sven

The $25,000 section 179 expense deduction for >6,000 lb GVWR vehicles can be taken only if the business use is 50% or more. If business use is more than 50% but less than 100% then both the $25,000 and the depreciation expense is multiplied by that percentage and limited to that amount (ie if 50% business use then $25,000 x 50% = $12,500 is the allowable section 179 expense deduction).

Anthony said:
“This is just accelerated depreciation though. You still get to write off the price of the car, just over a longer period of time.”

A MUCH, MUCH LONGER period of time. It would take 37 YEARS to fully depreciate a $100,000 Model X, after taking the $25,000 section 179 deduction in year one!!! Automobiles are “listed property” under IRS regulations, which SEVERELY limits the depreciation deduction that can be taken. That’s why corporations and business owners lease cars instead of buying them. If the car is purchased, the depreciation deduction is limited as follows: year 1 is $3,160, year 2 is $5,100, year 3 is $3,050, year 4 and ALL later years is $1,875.

Dragon

Thanks for giving us some details that really should have been in the article, sven. I know some (many?) business owners like to fudge the rules and write off things that really shouldn’t be considered business expenses, or tell the IRS it’s 100% business use when it’s really more like 10%, but I have a feeling if you try to do that on a $25k item the IRS is going to seriously consider putting you through an audit. Other than certain business types like taxi and hauling, I don’t expect many companies/individuals to be able to get much out of this tax break.

sven

Oops, it appears that I made a BIG mistake.

If a vehicle weighs over 6000 GVWR, the IRS does not define it as a passenger car, and is therefore NOT “listed property” and NOT subject to the severe limitations on depreciation on listed property. What this means is that the owner of a Model X owner who uses his vehicle for 50% to 100% for business can fully depreciate the vehicle over 5 years subject to the business use pecentage, instead of being limited to the “listed property limitations. In other words, that means that for a $100,000 Model X used 100% for business use, the owner can take a $25,000 section 179 deduction in year one and also take depreciation deductions totaling $75,000 over five years, instead of $15,060 depreciation allowed if the Model X was listed property. That extra up to $60,000 in depreciation is the equally important part of the story not mentioned in the article above

http://www.irs.gov/publications/p946/ch05.html#en_US_2013_publink1000107652

I think, section 179 depreciation can be claimed only for first year.

http://www.irs.gov/publications/p463/ch04.html#en_US_2014_publink100033963
“You can claim the section 179 deduction only in the year you place the car in service.”

For SUVs etc, the limit of this deduction is $25k if 100% business use. Otherwise, multiply by percent of business use. For any other car, that limit is $11,160.

“Limit on total section 179 deduction, special depreciation allowance, and depreciation deduction. Generally, the total amount of section 179 deduction, special depreciation allowance, and depreciation deduction you can claim for a car that is qualified property and that you placed in service in 2014 is $11,160. The limit is reduced if your business use of the car is less than 100%. See Depreciation Limits , later, for more information.”

sven
Yes, only in the first year. The important distinction to determine whether you can deduct the full sec 179 expense and the full depreciation expense is whether the Gross Vehicle Weight Rating (GVWR) of the vehicle is over 6,000 lbs. If under 6,000 lbs, the vehicle limitations on Sec 179 and depreciation apply. In the section that you quoted in Publication 463, “car” is specifically defined term. Pub 463 defines car as follows: “Car defined. For depreciation purposes, a car is any four-wheeled vehicle (including a truck or van) made primarily for use on public streets, roads, and highways. Its unloaded gross vehicle weight must not be more than 6,000 pounds.” So a “car” as the term is used in Pub 463 can be either a car, SUV, truck or van with a GVWR 6,000 the Sec 179 deduction is $25,000 if 100% business use. (ie a vehicle that is not a “car” as defined by Pub 463.) You would also be allowed to take the full depreciation deduction of $15,000 in addition to the $25,000 Sec 179 deduction. ($100,000 – $25,000 = $75,000 x 20% [5 yr MACRS] = $15,000). IRS Pub 463 is badly written. It says: “Limit… Read more »

Sweet revenge on the Hummer Loophole!

Jonathan

That’s pretty awesome. So if you own a business and buy this car, assuming you’re in a relatively high tax bracket, you get $7500 from Feds, $2500 rebate (in CA), and now up to $13K in a business write off. Once the 70D version this comes out, that could make this a pretty attractive option. All of this could drive the price down to about $50K, which is fairly reasonable for a high end SUV.

It would have been interesting if the GVWR came out to be 5999lbs after the initial design, so then Tesla just puts a small weight in there to put it over 6K.

GrokGrok

Based on the curb weight of the P85D (per Car and Driver), that’s about 500 pounds more, probably mostly due to those falcon wing doors.

Pushmi-Pullyu

It’s almost certainly mostly due to the Model X having a larger body. The falcon wing doors will add some weight, but almost certainly not as much.

GrokGrok

Maybe, although the doors also required the roof be significantly strengthened (and presumably made heavier) in order to support their weight, something a normal vehicle’s roof isn’t required to do.

Pushmi-Pullyu

I see; you didn’t mean just the additional weight from the doors themselves, but the additional strengthening of the body which the larger door openings made necessary.

But the MX would still have weighed more than the MS, even with normal doors. Actually, I find it surprising that it’s only 500 lbs. more, but the MX’s aluminum body is a lot lighter than the typical car’s steel body.

TomArt

Yeah, there is more car and more seats – those polarizing Falcon Doors, and any issues associated therewith, are most certainly negligible by comparison.

Nix

There is the additional weight of an entire row of full sized seats to fit adults too.

(The jump seats for kids in the Model S are options, so that weight isn’t included at all in the official curb weight).

Calculate in the extra weight of the 90 battery over the 85 battery, and the extra size of the cabin all the way around, and the doors don’t seem like they would be the reason for the weight difference.

Pushmi-Pullyu

Wikipedia says:

“The gross vehicle weight rating (GVWR), or gross vehicle mass (GVM) is the maximum operating weight/mass of a vehicle as specified by the manufacturer including the vehicle’s chassis, body, engine, engine fluids, fuel, accessories, driver, passengers and cargo but excluding that of any trailers.”

Dragon

I was wondering about that. Another bit of info that would have been appreciated in the article.

‘This is just accelerated depreciation though. You still get to write off the price of the car, just over a longer period of time.’ Um…this…as is mentioned…+1000 I have been trying to dispel the ignorance of the ‘deduction’ for years. When the tax code says you can ‘expense’ it, it just means all of the deduction comes to you in one year. Otherwise, you depreciate the cost- claiming PORTIONS of the same deduction over 6 years. If you used straight line depreciation. You would divide the ENTIRE cost by 5 (a car would be a 5 year item). You get to take 1/2 of that fifth in the first year (the government assumes a half year convention most of the time, meaning you placed the item in service on July 1st). You then take four fifths of that deduction over the next four years, and finally claim that last half of a fifth in the final year. If your tax rate stayed the same or went down, you gain an advantage in deducting the entire cost in year 1. (And the advantage of stagnant tax bracket is found by what happens to your money via inflation) Note that if you… Read more »

…and by the way, in case you were wondering, if the business item doesn’t last the full 5 years, you get to claim the rest of the deduction (minus any sale proceeds, of course) in the year the item went away.

Now what does an employee of a tech company do to get to write off this nice toy? I sure pay enough (>$100K) taxes on the w2 income and short and long term capital gains tax (those tesla options paid off sweet last year) and at least the investment income was mostly due to me being infatuated with the emerging technology and betting on it. One way to afford the tesla model S or X could be to put it on get around.com or rideshare part of the time, and have some revenue to help with the payments. At that point, could the 1099 income of maybe $1k/month at least be going towards the car payments fully pretax? Or do I have to start a business 🙂

There is a deduction allowed for employee business expenses. A teacher not being reimbursed for classroom materials or a military reservist buying uniforms comes to mind. However, before you can deduct a penny, you must reach the threshold of 2% of your adjusted gross income (that’s ALL income- so not just the reservist’s drill pay). Only AFTER you deduct this 2% are you figuring out your final deduction. Because of this 2% rule, not many people get to use the Employee Business deduction.

And while the price of a Tesla would seem to send one into the stratosphere of deductions, you would be setting yourself up for an audit for sure. In general, an employee would not be using a full blown cost basis for a car…they would be using the standard mileage rate. The standard mileage rate is currently 57.5 cents per mile…AND those miles had better NOT include your commute- those miles to your first, and after your last, business stop, for the day.

yeah, not interested in the penny pinching in regards to noncommute miles counting against W2 income, but what about the investment income, or renting out the model X say 10 days a month on getaround.com, at that point I want to depreciate the car off of that 1099 income at the very least. How do I restructure to make this work, become a part time real estate agent?

sven
flmark said: “When the tax code says you can ‘expense’ it, it just means all of the deduction comes to you in one year. Otherwise, you depreciate the cost- claiming PORTIONS of the same deduction over 6 years. Otherwise, you depreciate the cost- claiming PORTIONS of the same deduction over 6 years.” That is incorrect. The section 179 expense is in addition to any allowable depreciation expense, however it does reduce the amount (cost basis) that is subject to depreciation. As I stated in a post above, automobiles used in business are “listed property” under IRS regulations, which SEVERELY limits the depreciation deduction that can be taken on them. That’s why corporations and business owners lease cars instead of buying them. If the car is purchased, the depreciation deduction is limited as follows: year 1 is $3,160, year 2 is $5,100, year 3 is $3,050, year 4 and ALL later years is $1,875. If after the five year depreciation recovery period you have unrecovered basis due to the “listed property” depreciation limitations on automobiles, you can continue claiming a depreciation deduction each successive tax year until you recover your full basis in the car. It would take 37 YEARS to… Read more »
sven

Oops, it appears that I made a BIG mistake. The Model X is not “listed property,” and therefore not subject to the depreciation limitation of listed property.

If a vehicle weighs over 6000 GVWR, the IRS does not define it as a passenger car, and is therefore NOT “listed property” and NOT subject to the severe limitations on depreciation on listed property. What this means is that the owner of a Model X owner who uses his vehicle for 50% to 100% for business can fully depreciate the vehicle over 5 years subject to the business use percentage, instead of being limited to the “listed property” depreciation limitations. In other words, this means that for a $100,000 Model X used 100% for business use, the owner can take a $25,000 section 179 deduction in year one and also take depreciation deductions totaling $75,000 over five years, instead of $15,060 depreciation allowed over five years if the Model X was listed property. That extra up to $60,000 in depreciation is the equally important part of the story not mentioned in the article above.

http://www.irs.gov/publications/p946/ch05.html#en_US_2013_publink1000107652

You made more than one mistake and not the least of which is to say that I was incorrect. I used to lecture on this stuff and I do my own 1120s forms every year. The computer program I created calculates all relevant information, including declining balance depreciation (most think of this as accelerated depreciation because it takes bigger chunks in early years). To even begin to imagine that thinking a car takes DECADES to depreciate shows how far off the mark you are. I don’t know whether you got lost in your own minutia, but my only concern is that others don’t get lost in it as well. To explain it in simple English so that others understand…ANYTHING you use in your business that is supposed to last longer than a year is considered a depreciable item. If you review the class life of items mentioned, you will see that the vast majority of items used in ‘regular’ businesses are considered to have a 5 or 7 year life. It does not matter that a computer or cell phone is obsolete in a shorter time frame. And it does not matter, either, that your desk will probably last 10… Read more »

flmark,
Thank you for your valuable expert opinion! I don’t think you will get thanked here much, as people here would rather hear the rosy but false info on the huge deductions for Model X.

Thanks. The appreciation is appreciated. My software was largely unsuccessful because I gave people TOOLS, but it was necessary for them to learn things…and that was just too much to ask. I took my show on the road, trying to teach things and repeatedly got the comment that they learned more from me in two HOURS than they had learned in two YEARS of practice management classes. But even the ‘experts’ don’t get it. My CPA brother in law wasted hours trying to get me to buy into becoming a C Corporation (vs S Corp). There is one big reason you don’t do this- you get taxed TWICE (once as the corporation and once as a person). He tried all kinds of fancy CPA tricks, but the end result was the same. The basic premise is that his tricks involved moving money into tax DEFERRED retirement accounts. People just don’t get the DEFERRED part. Your IRA will eventually be taxed. You HOPE you are in a lower tax bracket when it is. I got screwed by the (private) financial planners when I was in the military, because I was setting aside lots of money when I was in a LOW… Read more »
ffbj

It was interesting reading through all that, and I will say thank you too. Personally that stuff just drives me nuts. I just try to zero everything out so I pay no or very low taxes.

sven
You are mistaken. I own a Volt and have NEVER said it is not an EREV, because it is. Many years ago I was a tax accountant in a Big 8 pubic accounting firm for many long and grueling tax seasons. I do know what I am talking about. flmark said: “To even begin to imagine that thinking a car takes DECADES to depreciate shows how far off the mark you are.” Yes it would take decades to depreciate very expensive car that is listed property. That’s why businesses always LEASE instead of BUY expensive luxury cars for their execs; because its “listed property” which is subject to “passenger automobile” depreciation limits that would take over four decades to fully depreciate a $100,000 car with a GVWR of less than 6,000 lbs. An exception (loophole) to passenger automobile depreciation limits are cars with a GVWR of over 6,000 lbs like the Hummer and Model X, which are exempt because the IRS defines passenger cars as a vehicles with a GVWR of under 6,000 lbs. See page 61 of IRS Publication 946 – How to Depreciate Property, – Chapter 5. Additional Rules for Listed Property, – Do the Passenger Automobile Limits… Read more »
EVERYONE SHOULD READ THIS COMMENT BECAUSE IT CONFIRMS WHY ‘EXPERTS’ MAY, AND PROBABLY AREN’T, ‘EXPERTS’ AFTER ALL You know what Sven, your discussion is thorough, and it may indeed be accurate- to SOME (or perhaps even major) extent. Since few in this discussion thread have real need to begin to think about using it, I won’t bother researching the details. In our dental office application, as in a great many other businesses, a car is simply not a business expense and we are better off taking the general mileage deduction when needed (which is actually great when your real expenses are from an electric vehicle and actually WAY less than the 57.5 cents currently allowed). HOWEVER, if you did indeed work as a tax accountant, and I have my doubts, your previous discussion confirms my feelings that ‘experts’ are really nothing of the sort and do indeed end up getting so caught up in their own minutia that they are often WRONG about a great many things they think that they are ‘expert’ on. The first BLATANT example of the failings of your ‘expert’ advice came when you tried to CORRECT your own previously ERRANT information (and I guess we… Read more »

…and btw, I did merely cut and paste Sven’s own words and didn’t notice until later that he actually worked at a PUBIC accounting firm…hmm…that could explain a few things…and would make for a very interesting movie that might have an NC17 rating.

offib

Christ, what a lump! 3000kg, there are a number of small roads near where I live that prohibit +3t vehicles, which an image of a delivery lorry…

Ocean Railroader

There are a lot of bridges with a five ton weight limit on it were I live but they are being replaced. But still I would be careful if I came up to one of these bridges in it.

danpatgal

Yes, my thoughts exactly. There’s a bunch of tax comments on this story, but isn’t the curb weight jump from the Model S (already a HOG at 4,647 lbs) up to 5,441 lbs for the X kind of crazy!?!? I can’t reconcile the claims that this is an efficient, clean, good means of transporting humans with that ratio of anywhere from 4 to 27 times heavier than the passengers it can haul (using 200lbs passengers, no cargo). Yeah, it’s fun, but this is not a clean or efficient machine. Yes it’s better than driving a Hummer or riding in a helicopter, but can we please get something a little more reasonable in size, weight, efficiency and cost for the rest of us?

Ocean Railroader

I’m really glad Tesla is using a loop hole that has helped put millions of giant low millage dino juice trucks on the road. If Tesla invents a truck it really rocket up sales.

Speculawyer

“Yes, the curb weight of Model X is 5,441 lbs. So we expect the GVWR to exceed 6,000 lbs. This means a Section 179 deduction could be taken for to up to $25,000 of the purchase price.”

It would be funny if they ended up a few pounds short and then installed a few lead bricks in it (that you could remove easily) to get over the limit and claim the tax-credit.

The fact that that tax-loophole still exists is an indictment on our government.

super390

What better way to get that tax loophole repealed than to get Congressional Republicans to reverse their position on it because it now benefits an “enemy” vehicle? Perhaps the environmental benefit from a repeal will be the greatest of all.

Nix

The use of the 179 tax code for cars is completely dwarfed by the abuse that property developers do with this tax loophole.

Let’s say you build high-rise residential Towers that you lease out. Maybe you even plaster you name across them.

The first thing you do, is claim that your real estate is depreciating, and take a “yyuuuuggee” section 179 tax deduction. Now the real world knows that real estate actually appreciates, instead of depreciating. But this tax loophole allows these developers to pretend that that it is depreciating quite quickly, and they get a big tax break in their first year.

This is small potato(e)s.

Not a loophole, not an abuse. We own a business and we are not developers. If some of what the business owns is ‘real’ property (as in ‘real estate’), it ‘depreciates’ (in other words, you get to deduct a portion of what you spent on it) over the next 39.5 years. That is not fast. And a business owner needs SOME way of deducting money (ie not having tax on money they spent to buy the place). When you sell the property, there is recapture and you do pay taxes on your gains. But think about the time frame…FORTY FREAKIN YEARS!!!

You DON’T get to deduct payments on loan principle (only interest is deductible)…and most mortgages don’t let you pay things off over FORTY FREAKIN YEARS!!! So, if the property is not appreciating, you are really screwed and will be cash negative for almost the entire time you own the property.

[It would be good if people did not develop opinions on things that they don’t know much about.]

Nix

One problem with tax experts is they get so deep into the tax code that they can’t see the forest for the trees.

So I will resort to easy yes or no questions so you might find your way. Forget about loaded words like “loophole”, and just answer the questions honestly.

1) Do the majority of housing buildings in New York City appreciate in market value instead of depreciate over 40 years? Either yes, they appreciate in market value, or no.

2) Is it possible for a developer to use a Section 1031 Exchange to sell their property (“trade”) and invest elsewhere? Leaving all that “depreciation” behind? Yes or no?

No equivocating. Just simply yes no answers. I don’t predict I will get them.

You are right, because there are very few simple answers in life, especially in taxes. The tax code does incentivize certain activities in seemingly ridiculous ways. In my opinion, nothing holds a candle compared to the personal exemption allowed on homes after living in them two years. So you buy a shrewd fixer upper and move in and improve it and sell it and every two years you have the potential of making a half million dollars without paying a penny of tax on it. I don’t have enough interest to go back in my memory to dig into real estate tax advantages. If memory serves, there was something called a Starker exchange where some people realized gains without taxes. Maybe that is what you refer to. Some people just live to make money and I guess I can say more power to them. In the previously mentioned example, you could make lots of tax free money by living in a non- stop construction zone and uprooting yourself every two years. In my opinion, that is no way to live. I learned just enough about Starker exchanges to lump them in the same category. Living your life just to avoid… Read more »

…and based on your text, perhaps you think something different of me than I am. I am a former naval officer and degreed mechanical engineer. I taught myself databases and computer programming. I obtained the ‘Tax Guide for Small Business’ and related publications and digested what they said. I skimmed over the stuff that didn’t apply to me. ‘Experts’ like to go get fancy titles and degrees. I learned a long time ago that more initials after a name probably make you less qualified to have common sense understanding…but very adept at using big words in the right circumstance.

Nix

All that blathering, and you failed to simply answer:

Yes, and Yes.

That doesn’t change whether you were in the military or anything else you wrote.

Wallace

I cannot believe this tax break is still law and yet all those complaining about the $7500 tax incentive for EV’s, seem to disregard the whopping $25,000 break for 6000 pound vehicles. Proof that all the complaining about EV tax breaks were all just politics.

Tesla already proved that a little heavy is OK in the S.

The X? Meh maybe a little heavy but…..

Americans kind’a like heavy anyway.

:]

Speculawyer, Wallace, and all the rest

…not a ‘tax break’, not a loophole, read my discussion above and even as Anthony briefly stated at the very beginning…

You don’t get any more money back in deductions…you just get your deducted money SOONER. Please dispel the urban MYTH of the ‘hummer write off’.

Brent

Unless expected return on capital is zero, getting money back sooner is getting more money back. (If you are talking about 1 year vs 7 years, the difference can be significant)

How many different times and specific ways do I have to write this? The simple rebuttal to your response is…GRADUATED INCOME TAX BRACKETS!!!! I already stated that if your tax bracket does not change or goes down, you are ahead with Section 179…but only inflation helps you in the status quo situation. Now, let’s do the typical CPA thing and tell a start-up business owner to use Section 179. Typically, that business owner could end up in the 10 or 15% tax bracket due to low revenue at the start. That means they get back 10 or 15 cents on a dollar for each deduction they move into Section 179 (away from standard depreciation). Now let’s watch them grow their business over the next few years and progress into higher tax brackets, where they would be getting 28-35 cents back on each dollar that they did NOT elect to use as a first year deduction. It is maddening that even CPAs do not get this SIMPLE concept. IT’S ALL ABOUT YOUR TAX BRACKET!!!!! You effectively DOUBLE OR TRIPLE your money back from the government if you WAIT and depreciate it when you expect to be successful in your business. Sorry,… Read more »
I will add this comment in summary to all those I have posted above. There is much bad attitude about being able to take ‘deductions’(from those unable to take them). What is a deduction and how much is it actually worth to you? A deduction is worth EXACTLY your tax bracket to you. Approximately HALF of this nation’s residents do not pay any income tax (ignore social security, that is not income tax). Then when you add in those in the 10 or 15 % income tax brackets, you find that the vast majority out there would get back very little for spending money because they can get a deduction. As was alluded to with commentary on ‘Listed Property’, the government tries to make sure a business asset is not a personal use item…and since no deduction is allowed for commuting, most business owners will see no advantage in buying a travel asset for the business. When I used to lecture on the topic, I liked to give this discussion…let’s assume you are in about the 1/3 tax bracket. That means you get back a third of what you spend. Looking at the inverse, that means that TWO THIRDS of… Read more »
Daniel

Lol. That’s another example of how the “Rich get Richer”

TomArt

So, 22″ rims? Cool. Then that means the standard (non-sport) rims will probably be 20″. That would look better than 19″ rims. The 22s look perfect.