Q:

Subject: Section 179 for SUV Valid for Child Care Business?

Hi Kerry,

I’ve been reading your blog with great interest and have almost  gotten the answer I need, specifically around section 179 deduction  for a 6000lb or greater SUV in 2004.

The only open question I had was if a Child Care business qualifies  for this vehicle deduction. My wife decided to start a child care  business last year and we purchase an SUV so she could have a very  safe vehicle for her business. After a couple of months of finding  the right family, she started taking care of 3 children and has been  with the family ever since. The SUV is mainly (more than 80%) used by  her to travel to and from our home to the family’s home, pick up the children from school and take them to various other activities. In my  view, the SUV is an integral part of this business and I wondered if  we can deduct the cost of the car as a Section 179 expense against  the child care business.

Thank you so much for your answer.

A:

As always, anyone with a business should be working with a tax pro to legally minimize your taxes and to see how simple matters like Section 179 apply to you. 

Equipment purchased for a child care business is just as eligible for the Section 179 deduction as for any other kind of business.  The same restrictions apply, such as the taxable income limitation and the requirement that the item be used more than 50% for business. 

This second point is one that you and your wife will need to work on with your own personal tax advisor.  Specifically, the wording of your question makes me wonder where her business is located for tax purposes.  If the kids are brought back to your home to be taken care of, then all miles related to that would count as business related.  If, on the other  hand, all of her work is done at the parents’ homes, there could be a problem counting the drive back and forth from your home as business miles and not as nondeductible commuting. 

Good luck.  I hope this helps.

Kerry Kerstetter

Follow-Up:

Kerry,

thank you very much for your answers. You answered exactly what I  needed to know and also thanks for making me aware of the commuting  miles.

It’s really great to have your site.