Section 179 deductions with a new business and pur...
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AndrewG25
Returning Member

Section 179 deductions with a new business and purchasing in December

If I'm starting my business in May 2021 and I purchase an SUV in December 2021 - 

 

  • Can I still qualify for Section 179 deduction with bonus depreciation even though I haven't been in business all year?
  • If the SUV is purchased in December, and it's used 80% for business, can I still deduct 80% of the value even though it was only in service for a month (December) and I haven't been in business the full year? How does that work?
2 Replies
Mike9241
Level 6

Section 179 deductions with a new business and purchasing in December

If I'm starting my business in May 2021 and I purchase an SUV in December 2021 -

do you mean starting your business in 5/2021 and SUV purchased in Dec 2020 or do you mean both the start of business and purchase occurred in 2020?

you can't take any depreciation in 2020 if your business won't start until 2021. 

the maximum depreciation you can take will be based on answering the question when selecting the type of SUV  - (rated gross vehicle weight over 6,000 lbs = heavy SUV or less = light SUV )

for a light SUV, the total depreciation for the first year is limited to $18,100*.8 = $14,480. 

i would recommend using bonus depreciation for the maximum depreciation and $0 179.  either or a combination of both will produce the same depreciation but179 has a downside.  if you dispose of it before the sixth year all the 179 must be recaptured and then depreciation is refigured using the MACRS rules. this doesn't happen with bonus depreciation. 

AndrewG25
Returning Member

Section 179 deductions with a new business and purchasing in December

No I mean I'm starting the LLC this month 5/2021 and I plan to purchase a SUV (Over 6,000 lbs) near December. 

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