Heavy SUV (>6000lbs GVWR) 100% 1s-yrear bonus depreciation & Sec. 179 expensing

[najibbabul]

I am a complete novice when it comes to tax filings. I am also new to Turbotax. I hope somebody can help me. I am sole proprietor with two LLCs and filing jointly with my wife. On December 31, 2019, I took possession of a new heavy SUV (>6000lbs GVWR) in Nevada (my residence) intended 100% for business. My first day of business use was December 31, 2019.

Here is what I have read. Based on the Tax Cuts and Jobs Act of 2017, heavy SUVs over 6000lbs are treated for tax purposes as transportation equipment and therefore qualify for 100% first-year bonus depreciation and Sec. 179 expensing (whatever that means!) if used over 50% for business. The example provided on the website was as follows: To illustrate the potential savings from these first-year tax breaks, suppose you buy a new $75,000 heavy SUV and use it 100% in your business in 2019. You can deduct the entire $75,000 in 2019 thanks to the 100% first-year bonus depreciation privilege.

Is this information correct? I have also read that there are different ways to get the most out of choice of deduction(s) but don’t understand it. How would I apply for the deduction? Many thanks!

[Anonymous_]

Click the Start button to the right of Business Vehicle Expense (see screenshot) and proceed from that point through the screens in Step-by-Step Mode.

Note that you will need sufficient taxable income to take the entire $75,000 as expense via Section 179.

[Anonymous]

yes 100% bonus would be available provided your business started in 2019.  no depreciation would be allowed if your business hasn't started in 2019.     we don't know your tax situation.   so to deduct $75,000 when you have little 2019 income but expect 2020 to be much better, would not produce the best tax savings.      

section 179 (election to expense certain depreciable assets)  also would allow you to deduct the full cost (again assuming the business started in 2019) provided your business income before the deduction is $75,000 or more. if less section 179 would be limited to zeroing out your schedule C income.  any unused amount would be carried over to 2020.

you can elect out of 179 and bonus (168(k)) and use regular MACRS which would provide the  smallest deprection deduction about $3,750 (becuase you acquired the vehicle in December it would be subject to the mid quarter convention)  

in effect,  depreciation on your vehicle (any other depreciable asset for that matter) can be legally manipulated to provide very little depreciation up to the full cost.   Thus you can manipulate your taxable income.    

[richardc1]

@Anonymous_ I am in the same situation and tried following the instructions through the business vehicle expense section but it only allowed me to take a very small standard depreciation,  there was no option to take 100% depreciation via section 179.  Are there specific questions that I need to answer a certain way in order to make this option available?

[MarilynG1]

@richardc1 You need to add your vehicle as a Business Asset in order to be presented with Depreciation Options.

In the Vehicle Expenses section, you will need to switch from 'Standard Mileage' to 'Actual Expenses'. 

Click this link for more info on Managing Business Assets.