Did you buy a new vehicle for your business in 2014? There’s good news on the depreciation front: The Tax Increase Prevention Act of 2014 reinstated the bonus depreciation available as a first-year deduction.
As you know, vehicle depreciation rules typically are more restrictive than those for other assets. For example, “luxury automobile” limitations generally apply to passenger vehicles that cost more than $15,800. When your business vehicle is a “luxury” passenger car rated at 6,000 pounds unloaded gross vehicle weight or less, the maximum first-year depreciation you can claim is normally $3,160. For 2014, bonus depreciation brings the total to $11,160.
For “luxury” light trucks and vans with a gross vehicle weight of 6,000 pounds or less, the maximum first year depreciation, including the bonus amount, is $11,460.
Heavy vehicles and trucks — those with a loaded gross vehicle weight of more than 6,000 pounds — aren’t subject to luxury automobile rules. In addition to bonus depreciation, you can take a section 179 expensing deduction for the cost of these vehicles. Just be aware the amount of section 179 may be limited depending on the vehicle.
Personal use of your business auto can reduce the amount of depreciation you can claim. In addition, your deduction may be disallowed if you fail to maintain a detailed mileage log of your business use.
Please call Carl Heinemann, your Chattanooga CPA, for more information.