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Buyers of News Heavy SUVs get Showered with Tax Breaks
Buyers of News Heavy SUVs get Showered with Tax Breaks this year. Special 50% bonus depreciation is the reason Here's an example:
YOur firm buys a new %50,000 SUV with a loaded weight over 6,000 lbs and places it into service in 2008. The business can expense $25,000. One half of the remaining $25,000 cost, $12,500 is bonus depreciation. And 20% of the $12,500 is deducted as regular depreciation.
The total first year write-off is $40,000, assuming 100% business use. That's 80% of the total cost. Use Heavy SUVs don't get bonus depreciation.
There's a move in Congress to rein in the largess. A House bill would limit the total first year write-off for Heavy SUVs to $11,260 for vehicles that are placed in service after the bill is signed into law.
But passage isn't guaranteed. Last year the Senate stripped out a similar provision in another bill, and it will oppose limits this year.
IRS can recapture tax breaks for Heavy SUVs in later years. If business use falls below 50% in a year after it is bought the excess of the write-offs claimed over straight-line depreciation is taxed as income, the Tax Court says (Birdsill, TC Summ. Op. 2008-55). The recapture partially negates the allowable expense deductions claimed on SUVs and Pickups with loaded vehicle weights over 6,000 lbs. And it applies to 50% bonus depreciation on vehicles put in use in 2008.
The recapture period lasts five years, starting with the year the vehicle is put in to use. Limit your personal use during that span.
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