Question
Small Business Section 179 Tax Question?
Hello - I started an internet venture this year and have currently earned 0 on the business. I'm expecting to start earning revenues near the end of this year. My questions are as follows: 1. I am actively engaging clients and meet with potential customers on a regular basis; if I am to buy a SUV for my business, can I write this off under section 179 (please keep in mind that my business hasn't earned any income yet, and may not until 2010)? If so, how much can I write off? 2. If my business hasn't earned any income yet, but I purchase the SUV for business use only (I have another vehicle that I use as my daily driver/for non-client facing meetings). How do I apply Section 179 to my taxes? 3. On my other job, I earn about 75k per year. Since I have a sole proprietorship, can I apply the section 179 deduction towards this income that I earned - even though it came from a different source? (e.g. would I be able to take the $25,000 deduction from the section 179 for a vehicle and then apply it to my 75k, thus bringing my taxable income down to 50k?) Thanks in advance.
3 months ago - 3 answers
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General rule of thumb first on Section 179: If you don't anticipate to have a net profit, then electing to expense under Section 179 won't do you any good. You'd get ZERO current year Section 179 expense (you might as well take regular depreciation in that case). You are only allowed to take Sec. 179 deduction if you'd have taxable income. And, if your Section 179 expense exceed your taxable income, the excess portion would be disallowed and carried forward. Further, you cannot mix and match between two different entities to better your tax position. Now, depreciation on automobile: Autos are listed properties, so it's limited anyway, see Publication 946 Section 5 for more info on auto deprecation. www ... efflandt, 25K first year bonus depreciation is still there, but it only applies to certain SUVs and other vehicles that qualify. Generally speaking, normal passenger vehicles are only allowed to depreciate on an annual basis (MAX each year): Year 1: $10,960 (with first year bonus depreciation election) without the bonus - $2,960 Year 2: $4,800 Year 3: $2,850 Year 4 and after: $1,775/year Now, this is assuming the vehicle has the basis. Of course, total depreciation cannot exceed the basis of the car.
by 123456789
3 months ago
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Other Answers
I don't know about deductions when you don't have a profit yet, but there is no longer a $25k SUV deduction. "Depreciation limits on business vehicles. The total depreciation deduction (including the section 179 expense deduction) you can take for a passenger automobile (that is not a truck or a van) you use in your business and first placed in service in 2009 is $2,960 ($10,960 for automobiles for which the special depreciation allowance applies). The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2009 is $3,060 ($11,060 for trucks or vans for which the special depreciation allowance applies)."
by efflandt- 3 months ago
Section 179 cannot generate a loss for your business. If your business has no income, you cannot take any Section 179 deduction.
by ninasgramma- 3 months ago
I'm shocked at the answers that said you cannot use Section 179 depreciation. I'm not going to comment directly on the SUV, let's turn it into office furniture. You CAN use your wages (or those of your spouse if filing a joint return) to apply section 179 to the office furniture and bring your other income down. The income does not have to be earned from the business that is taking the depreciation, you must just have earned income on your tax return. So the answer to your number 3 is yes. Helen, EA in PA
by Helen, EA in PA- 3 months ago