How To Take A 100% Tax Write-Off For A New Porsche, BMW or Cadillac
Essex & Associates:: http://www.essexinc.biz May 2, 2011
Thanks to the temporary tax cut deal President Barack Obama and Republicans struck last December, you can write off the full cost of purchasing a new luxury SUV-provided it's used 100% for business and its gross vehicle weight is more than 6,000 pounds.
Qualifying 2011 models include the Porsche Cayenne Turbo (MSRP: $106,000) , the BMW X6 M (MSRP: $89,200) and the Ford Lincoln Navigator (MSRP: $62,635).
If this high octane tax deduction sounds to you like an echo from the past, it is.
Early last decade, there was a public furor over the "Hummer loophole" which allowed small business owners and self employed folks (including doctors, real estate agents and others with a purported business use for a vehicle) to deduct most of the cost of purchasing big SUVs.
Last December's bipartisan tax deal included a temporary 100% write-off (known as 100% bonus depreciation) for new equipment placed in service by Dec. 31, 2011.
This break, which is unlikely to be extended, isn't just for big companies. It could be significant savings for the little guy, too.
The 100% bonus depreciation can be more valuable than another, longer-standing 100% write-off provision (known as Section 179) available to small businesses.
That's because you can't use Section 179 to claim a loss.
If you're actively involved in running a business, you can buy new equipment, use 100% bonus depreciation to generate a net operating loss and use that loss to offset other income on your tax return.
And if you don't have enough other income in 2011 to sop up the loss, you can carry it back and get a refund check from Uncle Sam for taxes paid in a prior year.
Plus, there's no special $25,000 SUV limit as there is with Section 179.
Wishing you many happy returns,
Wayne T. Essex Ph.D.
Essex & Associates
Tax, Accounting, HR, Payroll
7501 Paragon Road
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