Tax Guru – Ker$tetter Letter

Q-1:

Subject: Corp. tax deduction

 

Hello Kerry,

 

Is this vehicle rated ok for a one time full purchase price tax deduction for our corporation?

 

Model

TK10906 -2007 YUKON XL DENALI -AWD

 

Gross Vehicle Weight Rating

3360 kg (7409 lb)

 

Purchase price of 2007 Yukon XL is approx. $55,900.00.

 

Thanks for your help,

A-1:

Since the Denali is an SUV, its first year Section 179 deduction is limited to $25,000.  If it were a pickup truck, the maximum would be $108,000.

The rest of the cost over the first $25,000 would be depreciated over five years.

On a related note, I checked on the info that the local Chevy dealer was passing on in their ads.  They weren’t saying that the tax law changed as of 12/31/06. They were only pointing out the obvious fact that calendar year taxpayers had to buy a new vehicle by 12/31/06 in order to claim it on their 2006 tax returns.  Since your corp tax year doesn’t end until later, your deadline is later than those who use December 31 for their tax year.

I hope this helps.

Kerry

Q-2:

Hello Kerry,

 Is a Chevrolet Avalanche Truck ok as a one time full purchase price tax deduction for our corporation?

 Is an open bed truck the only kind of a vehicle that is ok for an one time full purchase price tax deduction?

 Thanks for your help,

A-2:

The rules for which vehicles weighing more than 6,000 pounds are subject to the $25,000 Section 179 limit are on my blog here.

“To not be subject to the limit:
I) is designed to have a seating capacity of more than 9 persons behind the driver’s seat,

`(II) is equipped with a cargo area of at least 6 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or

`(III) has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.’.”

With the Avalanche, it would need to weight over 6,000 pounds and have an open bed at least 6 feet long.

This sounds similar to a discussion we had last year about a Denali, which I actually posted on my blog.

Good luck.

Kerry