Question for Financial Advisers: 6000 GVWR and tax exemptions..?

I think it pre-dates Obama. During Bush, I used to commute with my boss in a big arse truck and he said his accountant told him he needed a big arse truck in order to get the tax deduction, something about farms and such.

I've also wondered about this.

But it doesn't keep me up at night.

I don't choose vehicle purchases based on tax deductions. Anything that is a true business expense is tax deductible anyway, if you are a business owner.

I can help you here, Not an accountant but have taken advantage of this part of IRS code for a little over 8 years now.

What your buddy is referring to is IRS Section 179 accelerated depreciation.

Back in 2010 You would have had to buy a f250 or similar. There were a ton of restrictions on bed size, weight and passenger seating.

In 2010 I bought a f250, cost was 57000. So I deducted 57000 off of my taxes in 2010. Say tax rate was 30 percent. essentially I sent 17,100 to ford instead of the IRS. Now the vehicle is being used for 100 precent business purposes, if its not there would be some phase out. I also can write off fuel, insurance, maintenance along the way.

So fast forward 6 years down the line, I sold the truck for 32,000 dollars. I did have to recapture the 32000, However as of 2016 you could buy a f150 with a longer bed as they lowered the weight restriction. So I pay 55000 for a new f150 and get a 2016 deduction that is 55000-32000= 23,000 . Assume 30 percent again, 6900 paid to ford and not IRS. If I sold the truck today for 45000, The 45000 would be income in 2018.

Now as of late 2017. you can accelerate the depreciation on much smaller vehicles. ex Range Rover and Lexus, tahoe sized SUV's. These previously had a limitation of around 50 percent then you had to straight line depreciate the other 50 percent.

You can use section 179 for almost any legitimate equipment purchase.

People use it to buy boats, planes, plant machinery, etc. There is a max you can depreciate of around 2 million per year.

A few keys are... Must be for 100 percent business purpose for full deduction, Does not have to be new, just new to you, Financing is fine, you don't have to pay for it all up front.

Also if you drive a lot of miles you might be better taking the mileage deduction. Everything's a calculation......