Section 179 Deduction Inquiry 2016

[Michael Paulson]

Hello,

I don't need a cargo van for my business at this point in time but after having reviewed the section 179 guidelines, it seems like it might be beneficial considering the tax bracket and financial position my business is in currently. I also read often that it is heavily advised to take advantage of the section 179 deduction.

So - I am trying to crunch the numbers for a potential vehicle purchase for my business and am weighing it against lost profit. From my understanding, I will initially be spending $1 to save $0.40 but the depreciation deductions in the following years will essentially drive those two values closer together.

So in this hypothetical scenario, the most beneficial vehicle would be a 6000>GVW non-passenger work vehicle such as a cargo van. I intend on using it 100% for business purposes. The vehicle in question would cost $40,000

For the first year, we would be allowed to deduct the full cost of the vehicle at $40,000 which essentially brings our out of pocket cost down to $24,000. 

Assuming a depreciation of $10,000 over the next five years, that still leaves a lot left on the table when it comes to the out of pocket cost.

Am I missing something from my formula? Where is this "free ticket" I keep hearing about?