Gas Guzzler Tax Deduction Restored To $500K For 2014 By Budget Bill

Green Car Reports ^ | December 29, 2014 | John Voelcker

[LogicDesigner]

If politics is the art of successful compromise--defined as outcomes that make all parties equally unhappy--then the recent budget extension bill offers something for everyone.

It extended the tax credits for electric-car charging stations and natural-gas-vehicle refueling stations, which should make owners of those vehicles happy.

But it did not extend the generous tax credits for purchase or lease of hydrogen fuel-cell vehicles, disappointing advocates of that zero-emission vehicle technology. Those advocates include Toyota, Hyundai, and Honda.

Now, it turns out, the often-reviled "gas guzzler tax deduction" was restored to its previous level by the budget bill as well.

As noted last week by the AutoSpies site, the Section 179 tax deduction that allows large capital purchases to be deducted as a business expense, rather than amortized over a number of years, has been returned to its previous level of $500,000.

(Readers can make their own judgment of the article's triumphal, sneering, "Take THAT, green-car weenies!" tone.)

Originally added to the Tax Code during the Bush era...

[Alberta's Child]

Do you consider deducting business expenses from revenue to determine profit for taxes a subsidy?

I believe there is a fine line between a true business expense and a "subsidy" is crossed when the legal definition of a "business expense" is set up in such a way that some purchases are favored over others for no objectively good reason.

That seems to be the case here, since I can find no reason why a new computer, a copying machine, or a 6,000-lb. vehicle would qualify for a Section 179 tax deduction, but a 5,000-lb. vehicle would not.

This isn't a subsidy for the business owner, mind you. It's really a subsidy for SUV and light truck manufacturers.

[Alberta's Child]

Correction, you were questioning it.

No, I wasn't. I may have been confusing in my post, though. I wasn't questioning whether the business owner was using the vehicle for a legitimate business-related purpose (I'm assuming they are). I was questioning whether they really needed a 6,000-lb. vehicle for their business, or if they could have used a smaller vehicle but opted for the larger vehicle simply because the tax code gave them an incentive to do that.

Egad man! The MLS fees would cost you a fortune!

Maybe so. LOL. I'm actually in that position, though not as a real estate agent. I'm an engineer by trade, and I work on projects as far as about 500 miles away from my home office.

[BBB333]

Bozeman, FRiend.

[thackney]

Keep in mind the limitations on this deduction, both over and under 6,000 lbs have deduction value, but not full purchase price.

http://www.section179.org/section_179_vehicle_deductions.html

For passenger vehicles, trucks, and vans (not meeting the guidelines below), that are used more than 50% in a qualified business use, the total deduction for depreciation including both the Section 179 expense deduction as well as Bonus Depreciation is limited to $11,060 for cars and $11,160 for trucks and vans.

Certain vehicles (with a gross vehicle weight rating above 6,000 lbs but no more than 14,000 lbs) qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31 and meet other conditions.

[LogicDesigner]

“Certain vehicles (with a gross vehicle weight rating above 6,000 lbs but no more than 14,000 lbs) qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31 and meet other conditions.”

I believe this is precisely what the recent legislation changed, from $25,000 to $500,000. A small business owner could buy several (large) vehicles, up to a total value of $500,000 and deduct them all. Mostly, those who have already done it sometime during 2014 will be the ones who benefit, although I'm sure some large orders have been placed during these last few days.

[thackney]

No. It only changed the total allowance for any and all equipment. It did not change the per vehicle allowance.

http://www.section179.org/section_179_deduction.html

Several years ago, Section 179 was often referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV’s and Hummers). But, that particular benefit of Section 179 has been severely reduced in recent years, see ‘Vehicles & Section 179’ for current limits on business vehicles.

[MrB]

The weight requirement for the tax deduction should have been another requirement.

It was meant to give a deduction for true equipment and capital investment (like tractors),
but has been applied to other vehicles under this lazy standard of looking only at the weight.

[thackney]

The 6,000 lb curb weight is the government distinction between “Heavy Duty” vehicles intended for more than passenger transport. Farm and other business often needs that capacity found in F-250 and larger type trucks. Weight limit is used for EPA requirements like the CAFE standards.

http://www.epa.gov/otaq/imports/glossary.htm#hdvhdt

- - - - -

The Tax deduction now includes language to put larger SUV and crossovers into a more limited deduction.

http://www.section179.org/section_179_vehicle_deductions.html

[SunkenCiv]

:’) I’ll catch in a bit later. I heard the tongue-twister, or one very close to it, on a UK comedy panel show, I think it’s called QI. Episodes are on YouTube, the host is some kind of trivia nut, or has excellent writers, or both.

[Rennes Templar]

Happy New Year Montana FRiend!

Do you know Henry Kriegel?

[BBB333]

I know who he is, but not personally.

Take care FReiend - looks like we will have some snow to shovel soon...