Thanks to the new 2017 IRS Tax Cuts and Jobs Act, many small businesses that invest in new equipment, including qualifying new vehicles, will be able to write-off up to theentire purchase cost of these purchases on their 2018 IRS tax returns.
Normally, businesses spread these deductions over several years. But now, many small businesses can write-off up to the entire purchase cost of one or more qualifying new Ford trucks or vans. And there is no dollar limit on your purchases.
IS THERE A CATCH?
Qualifying vehicles must be purchased and placed into service between January 1, 2018 and December 31, 2018. It must be used atleast 50% for business, based on mileage,in the first year it is placed in service. So if you choose to use it for both personal andbusiness purposes, the cost eligible for the deduction would be the percentage used for business.
WHAT’S THE URGENCY?
For the 2018 tax year, the qualifying vehicle must be purchased and placed into service by December 31, 2018
*1. Under Bonus Depreciation in Section 168(k) of the Internal Revenue Code, companies may be eligible to fully expense the cost of trucks, vans and SUVs rated over 6,000-lbs. GVWR, when purchased for business use. Trucks and vans that are considered passenger vehicles, rated under 6,000-lbs. GVWR, are limited to $18,000 of depreciation in the year of purchase with normal MACRS depreciation on the remaining basis in the vehicle in subsequentyears. A vehicle is not considered a passenger vehicle, and is thus not limited to the lower depreciation amounts, if it is considered a “qualified non-personal use vehicle”. Qualified non-personal use vehicles are vehicles that, by virtue of their nature or design, are not likely to be used more than a de minimis amount for personal purposes. Examples of qualified non-personal use vehicles include 1) a vehicle that can seat nine-plus passengers behindthe driver’s seat, 2) a heavy non-SUV vehicle with a cargo area of at least six feet in interior length or 3) a vehicle with a fully-enclosed driver’s compartment/cargo area, no seating behind the driver’s seat, and no body section protruding more than 30 inches ahead of the leading edge of the windshield. For more information, see IRC Section 280F(d)(7), Income Tax Reg., Sec. 1.280F-6(c)(3)(iii), Income Tax Reg. Sec. 1.274-5T(k), and Revenue Ruling 86-97, and contact your tax advisor for details. Consult your tax advisor as to the proper tax treatment of all business-vehicle purchases