...both from a cost standpoint and tax write off standpoint.
The tax act passed in February of this year contained some provisions which could make buying a larger SUV a tax favored purchase. The first requirement though, is the SUV must weigh in excess of 6,000 GWT. It doesn’t have to be new, so used is fine. The write offs would be as follows on a $35,000 vehicle; first, the vehicle qualifies for the instant $25,000 write off under sect. 179, then 50% of the remaining $10,000 of cost can be written off under the new act, and the remaining $5,000 would be eligible for standard depreciation on a 5 year asset (20% for the first year or $1,000). That’s a total first year write-off of $31,000 on a $35,000 purchase. Not bad, considering the recent run up in gas (although abating lately) has slashed prices of used large SUVs. Remember, the vehicle has to be purchased and put in service before December 31, and the business usage must be 100% to qualify for the total write off indicated above. You will get a pro-rata write off for vehicles with a business usage between 50-99%. For vehicles used in business with usage rates below 50%, the write offs are reduced dramatically. Call your accountant for these calculations.
Second Topic: The Bailout Tax Provisions
The bailout bill (passed in Sept., 2008) as finally enacted contained over 80 pages of extended or new tax provisions. In this brief space, we cannot adequately summarize all the provisions that may apply to you. My best suggestion is to call or visit with your accountant between now and Dec. 15th to see if there are provisions you should act on prior to year end.
In addition, the newly elected national administration has been verbal in announcing its intentions to change the tax code in an unfavorable way for certain high earning tax payers. Therefore, I encourage those who may be affected to visit with your accountant. There may be ways to accelerate income into 2008 instead of waiting to 2009 when higher income and capital gains rates may apply.
Good luck and here’s hoping it “all adds up” for you.
(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at Ginnatycpa@aol.com and if it is of general interest, he will address it in future articles)