Section 179 on passenger vehicle

[Joe Wood]

Hey everyone,

Stumbled across section 179 while looking for ways to increase my deductions. Anyone familiar with this? My wife and I bought a Ford Edge which is in our names, not the LLC. Will we be able to expense part of it? Would I need to transfer ownership to the LLC?

This is what I was reading..

For passenger vehicles, trucks, and vans (not meeting the guidelines below), that are used more than 50% in a qualified business use, the total deduction for depreciation including both the Section 179 expense deduction as well as Bonus Depreciation is limited to $11,060 for cars and $11,160 for trucks and vans.

Exceptions include the following vehicles:

• Ambulance or hearse used specifically in your business;
• Taxis, transport vans, and other vehicles used to specifically transport people or property for hire;
• Qualified non-personal use vehicles specifically modified for business (i.e. van without seating behind driver, permanent shelving installed, and exterior painted with company’s name).

Limits for SUVs or Crossover Vehicles with GVWR above 6,000lbs
Certain vehicles (with a gross vehicle weight rating above 6,000 lbs but no more than 14,000 lbs) qualify for expensing up to $25,000 if the vehicle is financed and placed in service prior to December 31 and meet other conditions.

[Lance Lvovsky]

Yes, Section 179 expense is one of the best ways to reduce taxes. You do not have to transfer the vehicle to an LLC to claim the deduction - as a matter of fact, if business use is not 100%, it is usually better to keep the vehicle in your name. Keeping the vehicle in your name gives you several options, including setting up an Accountable Plan in which the LLC will reimburse you for your mileage, treating mileage as an Unreimbursed Partnership Expense (assuming the LLC is multi-member), or depreciating the vehicle as an asset and thereby utilizing Section 179.

My recommendation is to consult with a CPA regarding which method will be most advantageous to you.