Section 179 - SUV write off?

Written by James Hirby | Fact checked by The Law Dictionary staff |  

An “everything you ever wanted to know about ‘section 179’ of the IRS tax code, but did not know where to look” online site is … wait for it … [http://www.section179.org/]. This site has been updated to be effective for 2012 use. It is very well written, organized, and very useful. It is NOT an IRS sponsored site. However, it does refer readers to IRS sites when appropriate, as in forms and instructions. Be aware that Section 179 termination comes at the end of 2012. Bummer …

The site also contains 2011 tax year information for those currently filing.

Section 179 rose out of the Stimulus bill. It allows, and very strongly encourages, businesses to invest in themselves and gain direct, immediate, and full expense reductions against gross income. Full expenses, immediate, this year, that is correct. In the past, businesses had to depreciate capital expenses over five years.

The “SUV” or “Hummer” qualifier was added throughout industry because companies took advantage of section 179 in its early years, buying SUVs and Hummers as capital expenses. In nearly all cases it was taking unfair advantage of a relatively good idea. Since those early days, the section’s rules have been tightened to what they are in 2012. The site provides very good detail.

There are monetary limits, qualifying vehicles and equipment lists, and bonus depreciation for companies that spend more than $560,000 on capital expenditure for qualifying items put into service and used at least fifty percent of the time for business, and other rules. The bonus depreciation is a nice additional incentive. Companies that post a loss can carry the write-off forward to the following year. Only in America ….

This site has major areas for deductions, a calculator, the Stimulus Act itself, qualified leases, equipment sellers, and a FAQ. The site registers “qualifying equipment” sellers, sending free banners and stickers to promote the fact that Section 179 exists.

The site has information about several geographical areas of the United States that qualify for a special, increased deduction out of Section 179. This site gives good information about this, and does refer the reader to the pertinent IRS area for specifics.

Section 179 benefits are taken simply by filling out the proper IRS forms for this deduction. IRS form 4562 and its instruction set are available via links to the IRS on this site.

One very interesting point is that Section 179 deductions can legally become a profit. On a lease that is applied over several years, the full expense of that lease can be deducted this year. What a country!!

The site even has a countdown timer ticking off the seconds until the end of this year when Section 179 is currently scheduled to terminate. The site also has a link to a leasing expert company to help businesses take full advantage of Section 179 allowances for non-tax leases.

For businesses, this one section has to have been one of the greatest occurrences favorable to business out of the IRS tax code. It was certainly a lovely ride.

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