Tax deduction section 179

[photoneffect]

The GVWR is not the issue with the Raptor...the 5.5' bed length is. If it were 6', you'd qualify for the full deduction under 179. But, because it's too short, you technically are limited to the $25K cap. Doing your own taxes, you could claim it's just a qualifying F150 and take your chances, but...

You are taking a chance, but I don't think it's a big one. The spirit of those amendments to that law was to stop Hummers and Escalades from being eligible. If you have an actual truck that you're using for your actual business you're not on their hit list.

More specifically, it would be hard to argue that the Raptor should be qualified as a "sports utility vehicle" under the law because it's not "primarily designed" to carry passengers. If it's not classified as an SUV then it has to be specifically excluded. The actual law says "...is equipped with a cargo area of at least 6 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment." With a bed extender you're "equipping" it with a cargo area with at least 6 feet in interior length.

If you get audited (and that's a big if) you have a pretty good legal argument. Use it for your business, haul cargo, and get a bed extender. Then just hope you don't get audited because it's a hassle even if you're right.

 

[ovrlnd]

Technically, you could just open the gate and it's over 6'. Law says nothing about the cargo area being enclosed on 4 sides.

 

[photoneffect]

Technically, you could just open the gate and it's over 6'. Law says nothing about the cargo area being enclosed on 4 sides.

Depends on how you read the word "interior".

 

[ovrlnd]

That's where the description sort of falls apart. What if you buy a SD chassis cab? By those rules, you've got no cargo area.

 

[naamanf]

I'm rollin' calling it a 6' foot bed with the extender. Figure deducting the entire truck first year and my 4500 sqft home office I should be good to go.

 

[photoneffect]

That's where the description sort of falls apart. What if you buy a SD chassis cab? By those rules, you've got no cargo area.

Agreed. I highly, highly doubt the IRS really cares about 6" difference in the bed. They have demonstrated for decades that they are quite concerned with the actual business use of a vehicle though. Worst case scenario, IMO, you get audited, they decide the Raptor doesn't qualify, and then you sell it immediately. They penalize you based on a low interest rate for the amount of excess depreciation you took and you move on with life. Best case nothing happens and you save tons of money.

The tax code is so unbelievably complicated and vague that at some point you just have to do the best you can. All businesses operate in gray areas because of it and this isn't even one I would consider all that controversial.

 

[Mink]

Does anyone use a section 179 tax deduction on their new raptor? From what I'm reading, only 25% of the value can be written off on taxes because gross weight is under 6,000. Can someone confirm this? Does anyone know of any other tax loop holes this truck qualifies for? Thanks!

It is GVWR meaning the max weight loaded. It qualifies for the 179 deduction.

 

[Ruri]

Agreed. I highly, highly doubt the IRS really cares about 6" difference in the bed. They have demonstrated for decades that they are quite concerned with the actual business use of a vehicle though. Worst case scenario, IMO, you get audited, they decide the Raptor doesn't qualify, and then you sell it immediately. They penalize you based on a low interest rate for the amount of excess depreciation you took and you move on with life. Best case nothing happens and you save tons of money.

The tax code is so unbelievably complicated and vague that at some point you just have to do the best you can. All businesses operate in gray areas because of it and this isn't even one I would consider all that controversial.

Yes I was reading the code over again and the 6' bed rule applies if the GVWR doesn't meet the 6,000 lbs. So since the Raptor's GVWR IS 7,050 lbs, it doesn't matter about the 5.5 ft bed. This is how a Range Rover Sport qualifies for this tax deduction.

Yes, the reward is much greater than the penalty on how much money I can save on taxes.

 

[ovrlnd]

I don't think that's right. The bed size rules were added on top of the 6000 lb limit in order to limit the SUV write-offs, so the truck has to meet both to qualify. Back in the day, my X5 qualified.

Option 2 is to lease it and expense the payments.

 

[lawdog]

Yes I was reading the code over again and the 6' bed rule applies if the GVWR doesn't meet the 6,000 lbs. So since the Raptor's GVWR IS 7,050 lbs, it doesn't matter about the 5.5 ft bed. This is how a Range Rover Sport qualifies for this tax deduction.

Yes, the reward is much greater than the penalty on how much money I can save on taxes.

Sorry, but that is just not accurate. Here is the language from the IRS web site:

Sport Utility and Certain Other Vehicles

You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,000 limit does not apply to any vehicle:

-Designed to seat more than nine passengers behind the driver's seat,

-Equipped with a cargo area (either open or enclosed by a cap) of at least six feet in interior length that is not readily accessible from the passenger compartment, or

-That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

https://www.irs.gov/publications/p946/ch02.html#en_US_2016_publink1000107395

Again, it probably won't matter unless you get audited. Then, if y'all expect the the IRS to read the tax code in a manner favorable to your $70K sport truck, good luck. You may have to pay the amount you improperly wrote off, plus penalties. The last time I did this with a 1794 crew cab Tundra, my accountant adhered to the $25K cap due to the 5.5' bed. YMMV.