NO JOKE: IRS Says Companies Can Write Off 100% Of Large SUV Purchase This Year

[Perian]

The Wall Street Journal; 05/14/2011



Article Quote:

• Depreciation deductions. In theory, this is an annual write-off that adds up to an asset's cost over its useful life. In practice, lawmakers often speed up depreciation to juice certain activities—like car buying—in ways that make big differences.

The bottom line: This year Congress is running a large "bonus depreciation" special on cars weighing more than 6,000 pounds, such as the Cadillac Escalade and Nissan Armada. Taxpayers may deduct 100% of the car's cost in the first year—subject to the personal use disallowance, of course.

Even better: If this deduction creates a loss, it may be used against other wages or carried back to generate a refund. BMW, General Motors, Ford, Jeep, Mercedes Benz, Porsche, Honda, Nissan, Toyota and Volkswagen all have vehicles qualifying for this break.

Depreciation is far less generous for cars weighing less than 6,000 pounds. Cars costing more than $15,300 get first-year depreciation of $11,060 this year, but those costing more than $30,625 get more in years two through six than those costing less.

Take, for example, two cars bought in December 2010 for business use, one costing $20,000 and one costing $31,000. Each gets $11,060 of depreciation for 2010, but the more expensive one gets a $4,900 deduction for 2011, while the $20,000 car gets only $3,200, says one expert.

"Congress is clearly biased against smaller cars," says Joe Kristan, a CPA with Roth & Co. in Des Moines.

Complete article at link.

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The following MY11 vehicles qualify for this credit:

2011 Audi Q7 3.0L TDI
2011 BMW X5 M
2011 BMW X5 XDRIVE35D
2011 BMW X6 HYBRID
2011 BMW X6 M
2011 Buick ENCLAVE 2WD
2011 Buick ENCLAVE 4WD
2011 Cadillac ESCALADE 2WD
2011 Cadillac ESCALADE AWD
2011 Cadillac ESCALADE HYBRID
2011 Cadillac ESCALADE HYBRID
2011 Chevrolet Truck AVALANCHE 2WD
2011 Chevrolet Truck AVALANCHE 4WD
2011 Chevrolet Truck EXPRESS CARGO
2011 Chevrolet Truck EXPRESS CARGO
2011 Chevrolet Truck EXPRESS WAGON
2011 Chevrolet Truck EXPRESS WAGON
2011 Chevrolet Truck SILVERADO C1500
2011 Chevrolet Truck SILVERADO C1500
2011 Chevrolet Truck SILVERADO C2500
2011 Chevrolet Truck SILVERADO C3500
2011 Chevrolet Truck SILVERADO K1500
2011 Chevrolet Truck SILVERADO K1500
2011 Chevrolet Truck SILVERADO K2500
2011 Chevrolet Truck SILVERADO K3500
2011 Chevrolet Truck SUBURBAN C1500
2011 Chevrolet Truck SUBURBAN K1500
2011 Chevrolet Truck TAHOE 2WD LS
2011 Chevrolet Truck TAHOE 4WD LS
2011 Chevrolet Truck TAHOE HYBRID
2011 Chevrolet Truck TAHOE HYBRID
2011 Chevrolet Truck TRAVERSE 2WD
2011 Chevrolet Truck TRAVERSE 4WD
2011 Dodge Truck DAKOTA 2WD
2011 Dodge Truck DAKOTA 4WD
2011 Dodge Truck DURANGO 2WD
2011 Dodge Truck DURANGO 4WD
2011 Dodge Truck RAM 2WD 1500
2011 Dodge Truck RAM 2WD 2500
2011 Dodge Truck RAM 2WD 3500
2011 Dodge Truck RAM 4WD 1500
2011 Dodge Truck RAM 4WD 2500
2011 Dodge Truck RAM 4WD 3500
2011 Ford Truck ECONOLINE CARGO
2011 Ford Truck EXPEDITION 2WD
2011 Ford Truck EXPEDITION 4WD
2011 Ford Truck EXPLORER 2WD
2011 Ford Truck EXPLORER 4WD
2011 Ford Truck F-150 2WD
2011 Ford Truck F-250 2WD
2011 Ford Truck F-250 4WD
2011 Ford Truck F-350 2WD
2011 Ford Truck F-350 4WD
2011 Ford Truck FLEX 4WD
2011 GMC ACADIA 2WD
2011 GMC ACADIA 4WD
2011 GMC SAVANA CARGO
2011 GMC SAVANA CARGO
2011 GMC SAVANA WAGON
2011 GMC SAVANA WAGON
2011 GMC SIERRA C1500
2011 GMC SIERRA C1500
2011 GMC SIERRA C1500
2011 GMC SIERRA C2500 HD
2011 GMC SIERRA C2500 HD
2011 GMC SIERRA C3500 HD
2011 GMC SIERRA C3500 HD
2011 GMC SIERRA K1500
2011 GMC SIERRA K1500
2011 GMC SIERRA K1500
2011 GMC SIERRA K2500 HD
2011 GMC SIERRA K2500 HD
2011 GMC SIERRA K3500 HD
2011 GMC SIERRA K3500 HD
2011 GMC YUKON 2WD
2011 GMC YUKON 4WD
2011 GMC YUKON HYBRID
2011 GMC YUKON HYBRID
2011 GMC YUKON XL C1500
2011 GMC YUKON XL K1500
2011 Honda PILOT 4WD
2011 Honda RIDGELINE RT
2011 Infiniti QX56 2WD
2011 Infiniti QX56 4WD
2011 Jeep GRAND CHEROKEE
2011 Jeep GRAND CHEROKEE
2011 Land Rover LR4
2011 Land Rover RANGE ROVER 4WD
2011 Land Rover RANGE ROVER SPT
2011 Lexus GX460
2011 Lexus LX570
2011 Lincoln MKT AWD
2011 Lincoln MKT
2011 Lincoln NAVIGATOR 2WD
2011 Lincoln NAVIGATOR 4WD
2011 Mercedes Benz G55 AMG
2011 Mercedes Benz GL350 BLUETEC
2011 Mercedes Benz ML350
2011 Mercedes Benz R350 BLUETEC
2011 Nissan ARMADA 2WD
2011 Nissan ARMADA 4WD
2011 Nissan PATHFINDER 4WD
2011 Nissan TITAN 2WD S
2011 Nissan TITAN 4WD PRO4X
2011 Porsche CAYENNE
2011 Toyota 4RUNNER 2WD LTD
2011 Toyota 4RUNNER 4WD LTD
2011 Toyota LANDCRUISER
2011 Toyota SEQUOIA 2WD LTD
2011 Toyota SEQUOIA 4WD LTD
2011 Toyota TUNDRA 2WD
2011 Toyota TUNDRA 4WD
2011 Volkswagen TOUAREG HYBRID

[Perian]

Only in America does the government push for 62 MPG in public and pull for 12 MPG in private.

Note: Before you go running to your local Porche dealer for that new Cayenne Turbo, a ten minute chat with your accountant regarding tax deduction qualification(s) may be in order.

.

[Eagles4Life]

I think the keyword there is "subject to the personal use disallowance, of course."
. So unless you have a small business, you are SOL.

[dindak]

Dang I wish they had this in Canada. Sweet deal.

[MrCritical]

Seems like they're saying you'd be not too smart to lease.

[GM-Joe]

This has to do with small businesses getting a little relief and trying to get them to stimulate the economy. Blue collar workers, young and old, were the ones most affected by the recession and it would make most sense to help them, rather than house them in prisons or give them unemployment, food stamps, and other government monies. Unfortunately, I think the government does not distinguish between an Express van and a Landcruiser, so we help everyone, because this is not a Socialist closed market.

[motorman]

helps sell the big SUVs where the companies make the most profit and can pay more income tax to the govt. follow the money when it comes to tax laws.

[tgagneguam]

Proof that the very complicated U.S. tax code that grows more complex daily needs to be simplified: one much lower rate for corporations (23-25%? from the current 35%?) minus the myriad deductions that together from what I can tell most executives support. This would be combined with a similarly uncomplicated tax code for individuals, again, free of deductions but with much lower rates.

In this case, there would be no tax breaks for large oil companies, there would be no incentives for electric vehicle purchases, and there would be no incentives for purchasing large SUV's. In that way, oil's price, and therefore gasoline's price, would adjust accordingly, and individuals and small and large businesses would spend the money they earn after taxes on the vehicle that best meets their overall needs. The market will determine the price of oil, and the market will determine which vehicles succeed and fail.

[2002 Caddy]

This has to do with small businesses getting a little relief and trying to get them to stimulate the economy. Blue collar workers, young and old, were the ones most affected by the recession and it would make most sense to help them, rather than house them in prisons or give them unemployment, food stamps, and other government monies. Unfortunately, I think the government does not distinguish between an Express van and a Landcruiser, so we help everyone, because this is not a Socialist closed market.

Ya, and of course everyone is missing the point that if you over deprecate an asset for tax purposes, you get to pay capital gains tax on that asset when you sell it... They are also missing that once you depreciate an asset to Zero... you can't depreciate it any more.

In the grand scheme of things this is a pay now or pay later kind of thing and really sounds bigger than it is...

Makes for some really good



"I'm freaking out and running around screaming" Press

[Dr. Show-Me]

Proof that the very complicated U.S. tax code that grows more complex daily needs to be simplified: one much lower rate for corporations (23-25%? from the current 35%?) minus the myriad deductions that together from what I can tell most executives support. This would be combined with a similarly uncomplicated tax code for individuals, again, free of deductions but with much lower rates.

In this case, there would be no tax breaks for large oil companies, there would be no incentives for electric vehicle purchases, and there would be no incentives for purchasing large SUV's. In that way, oil's price, and therefore gasoline's price, would adjust accordingly, and individuals and small and large businesses would spend the money they earn after taxes on the vehicle that best meets their overall needs. The market will determine the price of oil, and the market will determine which vehicles succeed and fail.

I was talking about this with a senior IRS executive yesterday, and he said that a simplified tax code is a good idea, but that a drastic change would carry with it the possibility of a revenue shortfall, that the most important part of the tax code is having the revenue to run the government. What happens if you go to a flat tax, then have a 40% revenue shortfall? How does the government get the necessary funds?
Corporations complain that they have the highest tax rate in the US, but fail to mention that their overall effective taxes PAID is no higher than middle of the pack.
I think the tax breaks should be for those who buy cars made in America.

[CJH]

The bottom line: This year Congress is running a large "bonus depreciation" special on cars weighing more than 6,000 pounds, such as the Cadillac Escalade and Nissan Armada. Taxpayers may deduct 100% of the car's cost in the first year—subject to the personal use disallowance, of course.

LOL - what a blatantly leading statement don't use a Silverado as an example, us an Escalade. This is aimed at large work vehicles, and as mentioned, you only qualify if you are a business.

Don't think many construction/tradesman/delivery/lawn care/etc. are running around in Armada's or Escalades.

[Masospaghetti]

^ Yeah, but you know this will be abused like crazy. The tax code is so screwed up.

[richmond2000]

LOL - what a blatantly leading statement don't use a Silverado as an example, us an Escalade. This is aimed at large work vehicles, and as mentioned, you only qualify if you are a business.

Don't think many construction/tradesman/delivery/lawn care/etc. are running around in Armada's or Escalades.

BUT tradies/lawn care would buy a transit Connect/or ranger but are "pushed" into a Econovan/sprinter IMHO it would have bean simpler to say any "truck" class Vehicle gets the write off

[Dr. Show-Me]

^ Yeah, but you know this will be abused like crazy. The tax code is so screwed up.

So show us a simpler tax code that will raise the same amount of revenue and that will promote business while being fair to the little guy and non-business owners.

[motorman]

^ Yeah, but you know this will be abused like crazy. The tax code is so screwed up.

the tax code is a pay off by the pols for campaign donations