Truck tax deduction

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

  1. bruces

    bruces LawnSite Senior Member
    Posts: 648

    Not true!

    The IRS has very strict limitations on vehicle depreciation. See above info from Fvstringpicker.


    Also, to correct my previous statement, Section 179 limit is still $24,000 for 2002. It goes up to 25,000 for 2003.

    An example of the additional 30% depreciation follows: (Applies to assets purchased after 9/10/01 and before 9/11/04)

    Total equipment cost 40,000

    Section 179 deduction 24,000
    Remaining cost to recover 16,000

    Additional 30% depr 4,800 (16,000 x 30%)

    Remaining cost 11,200

    Regular depreciation 2,240 (11,200 x 20%)
    (Assuming 5 year property)

    Total write off of 40,000 asset in year one 31,040.
     
  2. muddstopper

    muddstopper LawnSite Silver Member
    Posts: 2,342

    I Found out the hard way. When using the 179 deduction does not mean that You can deduct the whole Purchase price of the vehicle or other equipment. If you purchase equipment or vehicles for a total purchase price equal or less than the 179 allowable deduction and you only had income totaling less than the 179 allowabe deduction then you can only take the portion of the 179 deduction equal to the amount of income. Taking a bigger deduction than your income is not permitted and you will be audited and have to pay it back. If your total income is larger than the 179 deduction then you will probably be able to take the total allowable amount. If you are one of the many that hold two jobs and have 2 income sources, the 179 deduction can only be used against the income for which your equipment was purchased for.
     
  3. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,596

    Bruces is right on the 30% additional depreciation for equipment purchased after Sep 10, 2001. However, based upon my interpretation of the tax law, vehicles weighing less than 6,000# is limited to $7,660 the first year including the additional 30% and section 179 expense. If anyone has another interpretation, please advise.
     
  4. mike payne

    mike payne LawnSite Member
    Posts: 75

    I have another question on the same subject. What if I can only show that 80% of the total miles driven during the year were for my mowing business? Can I still take all of section 179 or just part? I have a 2001 F150 Supercab with the off road package. I checked the truck weight 6250, so some half tons do quallify.
     
  5. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,596

    Mike:

    You'd prorate the deduction between business and personal. In your example 80% of the expense would be a business deduction. the remaining 20% is a non deductable business expense.
     
  6. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,596

    I have to start doing a better job proof reading. My last sentence should read "the remaining 20% is a non deductable personal expense.
     
  7. Tony Harrell

    Tony Harrell LawnSite Senior Member
    Posts: 739

    The president is supposed to announce new incentives to boost the economy this week, maybe tomorrow. I believe there's some depreciation incentives included.
     

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