A Tip for Small-Business Owners
From smSmallBiz
Most small businesses are entitled to the privilege of immediately deducting up to $125,000 of new and used personal-property assets (meaning equipment, machinery, furniture, fixtures and software) under the "Section 179 deduction." Next, calculate your standard depreciation write-off using the cost remaining after subtracting the Section 179 deduction. You do all this by filling out Form 4562 (Depreciation and Amortization).
Beware of Reduced Section 179 Break for "Heavy" SUVs
Our beloved Congress placed a reduced $25,000 limit on Section 179 deductions for "heavy" SUVs with gross vehicle weight ratings (GVWRs) between 6,001 and 14,000 pounds.
The $25,000 limitation doesn't affect vehicles that are not considered to be SUVs under the tax law. For this purpose, "non-SUVs" are defined as vehicles that meet any of the following descriptions.
• Vehicles equipped with a cargo area that is not readily accessible directly from the passenger compartment and that is at least six feet in interior length. The cargo area can be open or designed to be open but enclosed by a cap. For example, many pickups with full-size cargo beds will qualify.
• Vehicles with: (1) an integral enclosure that fully encloses the driver's compartment and load carrying device, (2) no seating behind the driver's seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. For example, many delivery vans will qualify.
• Vehicles designed to seat more than nine passengers behind the driver's seat. For example, many hotel shuttle vans and minibuses will qualify.
In summary, vehicles with GVWRs above 6,000 pounds that meet any of the preceding descriptions are still eligible for the full Section 179 deduction of up to $125,000 for tax years beginning in 2007.
Bill Bischoff, a certified public accountant with more than 25 years of experience, has authored books and training courses for tax professionals, and frequently writes about consumer and small-business tax matters.
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