| DISCLAIMER: Everything contained here is information | | | | time for business purposes. Heres a little more |
| gathered by me through various news sources and | | | | background so youll understand how the Section 179 |
| IRS publications. Be sure to consult your CPA or Tax | | | | break works. Ill walk you through steps to complete |
| Attorney before purchasing a vehicle to make sure | | | | this process and hopefully reduce your tax liability for |
| you qualify. Background: In the mid 1940s, Congress | | | | THIS YEAR.STEP ONE is to find a vehicle that |
| passed a law that would allow for tax deductions to | | | | qualifies for the deduction. Again, it has to have a |
| farmers after World War II that would allow them to | | | | gross vehicle weight rating of over 6000 pounds. At |
| write off the cost of new equipment to encourage | | | | the end of this article, I will give you a list of new |
| more people to work the land. Although many people | | | | vehicles that is current AND that for sure qualify |
| took advantage of the law, it sat on the books for | | | | based on the weight. You can also usually look on the |
| years without any changes to speak of. However, in | | | | drivers door of any car, and there will be a sticker |
| 1996 the amount of money allowable to be written | | | | with pertinent information on it. GVWR is what you |
| off started to grow for the sole purpose of | | | | are looking for.Next, be SURE to PURCHASE the |
| encouraging business. Besides farm equipment, other | | | | vehicle. Leases do not qualify. However if you DO |
| things were added to the list such as vehicles. To | | | | lease there are certain deductions you can take, but |
| keep to the original spirit of the law, vehicles that | | | | generally you can only take them as you make |
| have a gross vehicle weight of over 6000 pounds | | | | payments. Interest rates are a non-issue, but rebates |
| qualify for accelerated tax write-offs in the year | | | | will affect the amount you can write off because |
| they are bought up to a certain dollar amount. Until | | | | factory rebates lower the sales transaction |
| recently, that amount was $25000. In simple terms, if | | | | price.MILEAGE LIMITATIONS: As with most vehicle |
| you qualify, you could write off up to $25000 of the | | | | related deductions, you are going to have to |
| amount of the vehicle in the same year you | | | | document your mileage to protect yourself in the |
| purchased it, plus the remainder of the price over the | | | | case of an audit. Remember, your vehicle must be |
| following four years.GREAT NEWS: In May of this | | | | used a minimum of 50% of the time for business |
| year, thanks to the 2003 Tax Act, the amount was | | | | purposes to even qualify for the deduction, but the |
| raised to $100,000. That means that you can buy | | | | AMOUNT of business use will also dictate what |
| one or more eligible vehicles and write-off the entire | | | | amount you can write off this year. For instance, lets |
| amount up to $100,000 on your 2003 tax return! This | | | | say you buy a $50,000 Lincoln Navigator and you use |
| is all documented in Section 179 of the tax code. Prior | | | | it 100% for your business, then you can write off |
| to this, you could take advantage of writing off | | | | $50,000 this year. But lets take that same Navigator, |
| depreciation, but it had to be done over five | | | | and say you only use it for business 60% of the |
| years.EXAMPLE: So say you spend $40,000 to buy a | | | | time.... then your write off for the year is $30,000 |
| new truck or SUV thats used 100% in your | | | | ($50,000 times 60%=$30,000).To read the rest of |
| self-employed business activity (meaning you conduct | | | | this extensive tax code 179 including a list of |
| your operation as a sole proprietor, LLC member, or | | | | affected vehicles visit your one stop shop to buy |
| partner). Provided you make the vehicle purchase | | | | new or used cars, sell your vehicle, get an online |
| before year-end and start using it for business | | | | insurance quote, buy spare parts, accessories and |
| before then, you can probably deduct the entire | | | | even an get an extended warranty. Original article |
| $40,000 cost on this years business tax forms.SO | | | | written by Jerry Reynolds, GM of Prestige Ford in |
| WHATS THE CATCH? Only that your newly acquired | | | | Texas. |
| vehicle will need to be used more than 50% of the | | | | |