Weather |  Futures |  Market News |  DTN Ag Headlines |  Cotton News |  Cotton II News |  Options 
     
  Home  
  Calendar  
  USDA Reports  
  Cottonhost  
  Newsletters  
- DTN Headline News
Taxlink
Thursday, April 18, 2019 1:51PM CDT
By Rod Mauszycki
DTN Tax Columnist

I'm writing this article as my "break" from reviewing tax returns. Let me tell you, this has been a challenging year! Between new tax laws, new tax forms and certain states' nonconformity, this will go down as a top-five-worst tax season. I was going to write on some of the top issues I've seen, but I'll wait for a future column.

What I'd like to touch on in this column are vehicles. Back in December, I remember a radio advertisement that, to paraphrase, said, "Buy a car and get a tax credit." It made me laugh. Apparently, the advertising community has no clue about tax laws! Now that I'm talking to my clients, it's amazing how many downsized their vehicles only to be surprised that they could not fully depreciate/expense the purchase.

So what are the rules?

The vehicle must be used 50% or more in a qualified business. If the business use is 50%, only 50% can be depreciated (or 50% lease payments expensed). There are also special rules if the vehicle is used by someone not directly connected to your business.

Let's start with passenger vehicles (cars, trucks and vans that are under 6,000 pounds gross vehicle weight). If you place a passenger automobile in use, the maximum depreciation and/or expense deduction shall not exceed:

-- First year - $10,000 (additional $8,000 if you elect bonus depreciation).

-- Second year - $16,000.

-- Third year - $9,600.

-- Fourth and later years - $5,760.

Now here is the confusing part: The IRS issued a Revenue Procedure (Rev. Proc. 2019-13 if you have trouble sleeping) in February for those who use bonus depreciation on passenger vehicles. It's too complex to get into, but a key takeaway is that you might end up depreciating the passenger vehicle past the five-year asset life.

If the vehicle is under 6,000 pounds, I would ask my clients if they intend on keeping the car/van/truck in excess of five years. Most times, the answer is "No." If that is the case, the client might be better off leasing the vehicle (two-to-three-year higher-mileage lease -- but be aware if the fair market value exceeds $50,000, there may be inclusion of income issues) or simply taking mileage.

Large vehicles (gross vehicle weight over 6,000 pounds) are not subject to depreciation limits, but limited to $25,000 of Sect. 179 expense. Like all things IRS, there are exceptions:

-- Vehicle is designed to allow more than nine people to sit behind the driver (i.e. bus).

-- Vehicle has a cargo area of 6 feet or more (i.e. extended bed pickups).

-- Vehicle does not have seating behind driver (commercial van).

If any of these exceptions apply, there are no limitations on Sect. 179 expensing. Most trucks and large SUVs fall under the 25K Sect. 179 expense limitation; however, you can still use bonus depreciation to fully write off the cost.

I know what you are thinking: How can something as simple as depreciating a business asset be so hard?

**

Editor's note: Tax Columnist Rod Mauszycki is a CPA and tax partner with the accounting firm of CliftonLarsonAllen, in Minneapolis, Minnesota. Send questions to taxman@dtn.com

(AG/SK)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Thursday, April 18, 2019 1:55PM CDT
Monday, April 15, 2019 11:21AM CDT
Friday, April 12, 2019 12:22PM CDT
Technically Speaking
Editorial Staff
Monday, April 22, 2019 9:06AM CDT
Monday, April 15, 2019 2:43PM CDT
Monday, April 8, 2019 11:30AM CDT
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Wednesday, April 17, 2019 11:03AM CDT
Friday, April 12, 2019 7:11AM CDT
Friday, April 5, 2019 8:22AM CDT
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Monday, April 22, 2019 3:51PM CDT
Monday, April 22, 2019 8:46AM CDT
Thursday, April 18, 2019 12:59PM CDT
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Monday, April 22, 2019 12:54PM CDT
Monday, April 15, 2019 9:37AM CDT
Wednesday, April 3, 2019 12:11PM CDT
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Tuesday, April 16, 2019 4:44PM CDT
Friday, April 12, 2019 5:24PM CDT
Thursday, April 11, 2019 1:17PM CDT
DTN Production Blog
Pam Smith
Crops Technology Editor
Thursday, April 18, 2019 12:37PM CDT
Tuesday, April 9, 2019 6:18PM CDT
Monday, April 1, 2019 11:34AM CDT
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Tuesday, April 16, 2019 11:17AM CDT
Friday, March 15, 2019 6:01PM CDT
Wednesday, February 20, 2019 5:17PM CDT
South America Calling
Editorial Staff
Tuesday, April 23, 2019 2:43PM CDT
Tuesday, April 9, 2019 2:22PM CDT
Wednesday, April 3, 2019 5:24PM CDT
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Sunday, April 21, 2019 5:07PM CDT
Monday, April 8, 2019 11:59AM CDT
Monday, April 1, 2019 8:23AM CDT
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Wednesday, April 17, 2019 4:45PM CDT
Friday, April 12, 2019 3:30PM CDT
Wednesday, April 3, 2019 12:05PM CDT
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Monday, April 22, 2019 4:55PM CDT
Thursday, April 18, 2019 12:39PM CDT
Wednesday, April 17, 2019 4:22PM CDT
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Thursday, April 11, 2019 8:29PM CDT
Friday, April 5, 2019 6:07PM CDT
Friday, March 22, 2019 5:24PM CDT
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN