BUSINESS

A big SUV has tax benefits -- for now

Practice Pointers. By Cathy B. Goldsticker, AMNews contributor. June 21, 2004.

Answers to questions about the business side of your practice

Question: SUVs are receiving attention lately by the tax legislators. I understand the attention relates to tax loopholes for SUVs and legislation trying to "sew up" these holes. What is the story with this, and am I too late to take advantage of it? With gas prices being what they are, I'm not sure I'm interested in these large vehicles, but maybe the tax deductions will make SUVs worth it.

Answer: Many years ago tax laws put an end to fast write-offs for "luxury" vehicles used in business.

Maximum annual depreciation deductions or tax-write-offs were established but were limited to "passenger automobiles."

A vehicle is a passenger automobile if it is a car that is rated at 6,000 pounds unloaded gross vehicle weight or less, or a light truck or van (including SUVs) that is rated at 6,000 pounds gross (loaded) vehicle weight or less.

Heavy SUVs, those with a gross (loaded) vehicle weight rating of more than 6,000 pounds, are not considered "passenger automobiles" and thus not subject to limited annual depreciation deductions.

Because they fall outside this definition, these SUVs can be expensed under a rapid tax write-off under Section 179 of the Internal Revenue Code. Section 179 has been recently touched by tax legislation to allow up to $102,000 (2004's amount) per year in tax write-offs of certain business equipment and furniture.

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