FORTUNE Small Business:

Tax deductions for your business SUV

Ask FSB helps a reader through the process - and pitfalls - of depreciating a business luxury vehicle.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Get small-business intelligence from the experts. Here's a chance for YOU to ask your pressing small-business questions, and FSB editors will help you get answers from the appropriate experts.
Your name:
* Your e-mail address:
* Your city:
* Your state:
* Your daytime phone #:
* Your questions:

(FORTUNE Small Business) -- Dear FSB: I have a rental property in Tahoe set up as a sole proprietorship. I want to purchase an SUV - which would weigh over 6,000 lbs - for both personal and business use. Can I take the accelerated depreciation?

- Mary, Tiburon, Calif.

Dear Mary: When you've got a valuable asset whose worth is going to decline within a few years, choosing accelerated depreciation is often a smart choice: It enables you to count the investment as a larger business expense earlier on.

But Diane Goodman, an Albuquerque based CPA, warns: "You can't even consider taking it unless more than 50% of your usage is for the rental property."

If you do use the truck for mainly business, you'll have to carefully document your mileage - both your personal and business use. Once you're able to report how many miles are devoted to each, says Goodman, you can take the rate of 50.5 cents per mile and apply it to the business-only miles when calculating your deduction.

Martin Chan, a Philadelphia CPA, notes that your 6,000-lb SUV could also qualify for a Section 179 deduction - but again, only if you use it for mainly business use.

"Think of the 179 as a bonus depreciation for $25,000," he says. Once you calculate your business usage, you can deduct $25,000 from that number, then apply the rest towards accelerated depreciation.

A sample calculation: If you purchase a $60,000 car in 2007 and calculate that 70% of the usage was for business, you're able to apply the deduction to a cost basis of $42,000. Then, you can take a Section 179 deduction of $25,000 and take accelerated depreciation for the rest. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.