Truck tax deduction

Discussion in 'Business Operations' started by KCLandscape, Dec 29, 2002.

  1. KCLandscape

    KCLandscape LawnSite Senior Member
    Posts: 526

    Feel free to put this in whatever section...

    I just read somewhere about a BIG tax write off if you buy a truck over 6000 lbs. Something Uncle Sam gives to the farmers (HA)
    Anyone know the details about this, or have done it

    Natas
     
  2. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    We lease all our equipment, trucks, sanders, mowers and more its 100% tax deductable on your whole payment not depreciation value as in most cases. Big $$$$$$ over depreciation values.
    www.telmark.com
    im not sure what your pacifics were but this info may help.
     
  3. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Probably talking about the section 179 expensing election.

    Lets you write off up to 25,000 of equipment in year of purchase.

    This takes in to account all equipment purchased during the year.

    That would be if you are using actual expenses instead of mileage.

    Just applies to vehicles over 6,00 gvw. So 1/2 tons generally won't qualify.

    Consult your tax advisor. If you don't have one, get one.

    Bad news is that if you write it all off this year and you are financing, next year you are still paying with no tax deductions.
     
  4. wriken

    wriken LawnSite Silver Member
    Posts: 2,154

    I bought a new 02 f-250, about 7000 lbs. it was about 38000.00, My tax person depreciates mowers ,pole buildings etc, so do I depreciate the truck, like for the term of the loan which is 5 years or depreciate it out in 3 years. Thanks
     
  5. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Posts: 1,277

    Bruce, I'm particularly interested in your take on this subject. If I'm correct, Natas is talking about deductions for SUV's and the like. There has been a slew of stories about this on the news recently.

    It seems it would affect non-landscaping bizzes more than us, but the way I understand it:

    If an accounting company (for example) wanted to buy some company vehicles for employees to use as company cars, if they were to purchase a Chev Impala, there would be the normal depreciation schedule. However, if they were to buy Lincoln Navigators, because they are classified as a light truck, and as such are eligible for front-loaded depreciation (because they are then classified as a 'farm' vehicle), they would, in the short term, get a huge benefit over buying an Impala. I don't think this has anything to do with the section 179, because this seemed to be unlimited - a large company could outfit their staff with 100 Hummers, and all fit in this tax loop. And that was in fact what was happening.

    The thing I don't get is, what's the advantage, other than huge year 1 depreciation? The entire thing is written off regardless of the deprec schedule, just a matter of when. Is it somethin got consider if you've got big profits that you'd like to sandbag?
     
  6. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,603

    Vehicles over a certain weight 6000 # can be written off over a shorter length of time. Vehicles less than 6,000# are generally considered "luxury" vehicles and stringent dollar limits are placed on the amount of annual depreciation that can be claimed. Most large SUV's weigh over 6,000# and qualify for the shorter write off period. A Chevy Suburban is a classic example.
     
  7. bruces

    bruces LawnSite Senior Member
    Posts: 648

    If I'm not mistaken (wouldn't be the first time) the write off for virtually all vehicles is 5 years (except for over the road trucks). The term of the depreciation will not vary, but there are limits on luxury vehicles (cars and light trucks) that limit the amount of depreciation taken in one year. For example, buy that 40,000 Mercedes suv to do estimates, and you might be depreciating it over 15 years to recover the full cost because of the limitaions.

    And you are right, depreciation is a matter of timing, you get it now or you get it later. If you take it all up front and are making payments, then you have no deduction to offset the cash paymment you are making in years 2, 3, 4, 5, etc.

    Also, if you take mileage instead of actual expenses, depreciation is figured in to the mileage rate.

    Oh, by the way, accounting companies are too tight to purchase nice vehicles for their employees.

    There is also a new provision in the 2001 tax act to create additional depreciation for assets purchased after Sept 10, 2001.

    The following is copied from the IRS web site http://www.irs.gov/formspubs/article/0,,id=81390,00.html

    Tax Year 2001 Forms and Instructions Changed by the Job Creation and Worker Assistance Act of 2002

    The recently enacted Job Creation and Worker Assistance Act of 2002 may reduce your taxes for 2001 if you acquired depreciable property after September 10, 2001. You may also be able to carry back a net operating loss from a tax year ending in 2001 or 2002 to the 5 preceding tax years. If you have already filed your 2001 tax return, you may wish to file an amended return.

    New 30% First-Year Special Depreciation Allowance
    If you acquired depreciable property after September 10, 2001, with a recovery period of 20 years or less, you may be able to claim an additional 30% first-year depreciation allowance. If you acquired, after September 10, 2001, a passenger automobile used more than 50% in a qualified business use, you may also be able to claim the additional 30% first-year depreciation allowance. More generous depreciation rules apply to certain property acquired after September 10, 2001, and used in the area of New York City damaged in the September 11, 2001, terrorist attacks.
    End Quote

    Again, consult your tax advisor, the depreciation rules are complex, even more so when you are dealing with vehicles.

    Further questions, post here, I will look up info to be sure.
     
  8. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,603

    Sorry but I submitted my post before I intended to. The bad news is that depreciation for a less than 6,000# vehicle is limited to $3060 the year placed in service, $4,900 the second year, $2,950 the third year and $1,775 thereafter. So basically it'll take me 10 years to write off a $23,000 pick-up with a gvw under 6,000#. The really bad news is that I'm limited to $3,060 combined depreciation deduction and section 179 expense on this vehicle.
     
  9. AztlanLC

    AztlanLC LawnSite Bronze Member
    Posts: 1,046

    I Don't really know but I'm almost certain that you can deduct up to $24,000.00 of any new equipment related to the business, either a truck car no matter GVWR, but to be sure check with your accountant I know this year I'll be writting off the whole cost of my bob cat and take depreciation on anything else.
     
  10. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    Very helpful post...lets keep this one alive....with related tax issues....All of us can use the different interpretations because my acct told me point blank that some of the rules can be vague and not all are interpreted the same by each acct.
     

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