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What You Should Know About Section 179 Tax Benefits

Posted at Tue, Dec 13, 2016 10:06 AM

Section 179 tax incentives for small business owners

For the small business owner, rancher, or farmer in Bismarck, December means searching for every tax deduction and incentive out there.

The December 31, 2016, deadline is coming up fast, but if you haven't utilized it already, it's time to think about what you can do with a Section 179 tax benefit in 2016.

 

About Section 179

This tax deduction could allow you to write off the entire expense of a business vehicle you buy in 2016.

Section 179 allows small businesses to deduct the full purchase price of qualifying vehicles or equipment purchased or leased during the tax year.

As you can see, Section 179 tax breaks are perfectly designed to help fund your new company vehicle.

But before you start brainstorming what to name your new Ford half-ton truck, be sure to familiarize yourself with the fine print of Section 179.

How to Take Advantage of Section 179

Here's a rundown of some key Section 179 provisions for North Dakota ranchers, farmers, and small business owners. Seen it before? It might have changed since last year, so please take a moment to review it.

  • To qualify for Section 179, the vehicle in question must be used for business at least 50% of the time.
  • Qualifying vehicles must meet one of these requirements:
    • Heavy “non-SUV” vehicles with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify (although some "extended cab" pickups may have beds that are too small to qualify).
    • Vehicles that can seat nine-plus passengers behind the driver's seat (i.e.: Hotel / Airport shuttle vans, etc.).
    • Vehicles with: (1) a fully-enclosed driver's compartment / cargo area, (2) no seating at all behind the driver's seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
  • For 2016, the maximum amount that can be written off is $500,000.
  • Total amount purchased is limited to $2,000,000. The deduction begins to phase out dollar-for-dollar after $2,000,000 is spent by a given business, making it a true small and medium-sized business deduction.
  • Qualifying vehicles for Section 179 can be either new or used.
  • They can also be either purchased or leased.
  • Qualifying new vehicle purchases also may qualify for Bonus Depreciation. Bonus Depreciation is being phased out, reducing in amount refunded each year so take advantage in 2016 while it's still 50%!
  • You can only claim Section 179 in the tax year that the vehicle was placed in service.
  • You can't claim Section 179 on a vehicle you purchased for personal use in a previous year, even if you change its purpose to business later.

Have more questions about what qualifies? Read all about vehicles that qualify for section 179 leases and purchases.

2016 section 179 deduction example

Ready to Utilize Section 179 Tax Deductions on Trucks for Your Bismarck Business?

If you need a new business or fleet vehicles, take advantage of the Section 179 tax deduction before December takes its final bow.

Whether it's a new Ford truck, a spacious new van, or  one of our qualifying used or pre-owned vehicles, adding a vehicle to your company's fleet is a great high note on which to end 2016.

If you have additional tax questions, consult your financial expert. For questions about our inventory, our Eide Ford staff is ready to clear things up.

*Please note: This information is provided by Eide Ford as a public service to you. It should not be construed in any way as tax advice or a promise of potential tax savings or reduced tax liability. Individual tax situations may vary. Federal rules and tax guidelines are subject to change. For more information about the Section 179 tax code and tax deductions, please contact your tax professional for complete rules applicable to your transactions and visit the Internal Revenue Service website at www.irs.gov.

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