We had an interesting and heated discussion on Sunday about whether the luxury tax would be re-instituted under an Obama Presidency.
Obviously, the luxury tax will only effect a small percentage of people whose lifestyle would not be altered in major way if it did return.
So tonight I thought we would discuss a deduction that WOULD have a major effect on many businesses...especially ones like Joe the Plumber's.
It is the IRS Section 179 deduction which allows businesses to get a major deduction when they buy a vehicle with a GVWR of over 6000lbs.
About Section 179 from Section179.org:
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the US Government to encourage businesses to buy equipment and invest in themselves. It is sometimes referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to purchase qualifying vehicles (like SUV's and Hummers.)
Essentially, Section 179 works like this:
When your business buys certain pieces of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a vehicle, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example.)
Section 179 Calculator
I would hope the next President would not only keep it but maybe amend it back to the higher amount allowed from a few years ago AND open it up so the business can choose ANY car or truck that meets the needs of the business. Plus make it higher if some chooses alternative vehicles like hybrids, NGV's, Clean Diesels, Bio-Diesels, etc. And finally make it even larger if they buy American or something that is over 50% American content.
Eliminating this deduction would have a major effect on many USA businesses in my opinion, including mine
This deduction is near and dear to my heart because I have been able to take advantage of it while building the AutoSpies.com business.
What would you advise the next President regarding Section 179?
2008 SEMA Auto Show Photo Gallery