Tax and Money Tip of the Week:
New Bonus Depreciation Rules
June 8, 2011 | No. 46
“Hummer Rules” Have Changed
New SUVs, with a gross weight of over 6,000 pounds, placed in service in 2011, can now be a 100% write-off if used 100% for business.
This is due to the new bonus depreciation rules. Previously, SUVs were limited to a maximum first year deduction of $25,000. Several years ago this limitation was put into the tax code to prevent large deductions for such vehicles—many called it the “Hummer Rule”.
New pickup trucks with loaded weights over 6,000 can also use this rule. Depreciation rules for work related automobiles remain unchanged for 2011.
If you use a vehicle for business, be sure to closely document your mileage even if deducting actual expenses. A 100% business use argument is sometimes hard to substantiate in an audit. If you can’t prove 100% business use, you can still use the limited deduction as long as the business-use exceeds 50% of the total yearly mileage.
Also, the SUV must be new—used vehicles do not qualify.
Give us a call if you want more details.
Questions or Comments?
Mark Vitek, CPA/PFS, CFP®
…until next week.