So I had started a thread on the recent Trump tax plan (passed late 2017), effective this year, which allows business owners to IMMEDIATELY deduct (no depreciation) up to 100% of the value of a Model X as a business vehicle from their federal income taxed in the year of purchase. That said, the thread was in Model X forum, so Model 3 people (I was a reservation holder and cancelled to get the X for less!) might not have seen it. The link to the other thread is here:
Model X IRS 100% Deduction “Hummer Loophole” - 2018 Edition
Basically, here's a summary below. Contact me via PM for any questions about this:
I had been on the Model 3 list for a long time and had been getting VERY impatient about the delayed arrival of the $35,000 model (which likely won't qualify for the federal $7500 tax credit). Then I heard that because I'm a small business owner and would be using the vehicle mostly for business (especially in its first year), I now would be eligible for an immediate 100% federal tax deduction on the Model X (but not Model 3 or Model S) because the IRS characterized the Model X as a heavy industrial vehicle (>6000 pounds GVWR weight, intended for actual equipment like farm tractors or delivery trucks but this is a loophole). With this, plus state tax deduction, plus the $7500 federal tax credit, a LOADED Model X (with FSD and EAP and premium seats etc!) came out CHEAPER than a Model 3, plus I could get it NOW and (with referral code from existing Model S or Model X owner) get free unlimited Supercharger access for life (not available for Model 3). I called my tax attorney who confirmed I could do it, and I did. NO brainer. Here's the math to show what happened before 2018 and during/after 2018 with new Trump tax plan:
First, the federal tax credit of $7500 will now be available 100% if you take delivery by end of September 2018. That's a certainty.
For the federal 100% depreciation/deduction, let's assume a $100,000 car and 100% documented business use to make the math easy (lower business use and you lower the percentage write-off, so for the rest of 2018, keep another car and try only using the X for business uses).
PREVIOUSLY (before Trump tax plan was passed), you would get:
Section 179: $25,000 deduction
50% Bonus Depreciation (50% of remainder, which is $75,000): $37,500 deduction (so far deduction is $25k + $37.5k = $62,500 deduction)
Regular depreciation (1/5 of the remaining $100k-$62.5k) = $7500 (with $7500 federal deducted each of the next 4 years as well)
TOTAL DEDUCTION IN 2017: $70,000 (with the remaining $30,000 spread over the next 4 years, based on % business use).
As of 2018, with the NEW tax bill, which CHANGED the 50% bonus depreciation to 100% bonus depreciation, you now get:
Section 179: $25,000 deduction
100% Bonus Depreciation (1000% of remainder, which is $75,000): $75,000
Regular depreciation: Not applicable!
TOTAL DEDUCTION IN 2018: $100,000 in full - immediate, no depreciation needed aside for the state income tax component, which is way less than federal.
So what is new is the 100% bonus depreciation. You can't be an employee and can't use it for commute from home to a regular work place, but you can for anything else that is legitimate business related for a business you personally own (sole proprietor or other pass through entity).
Send me a private message if I can be of help. There are many threads on Tesla Motors Club about this and many many small business owners like me who have gotten a loaded Model X for LESS than a Model 3, without having to wait. Look into it, talk to your tax adviser, and let me know if there's anything I can answer for you from a non-CPA perspective. Good luck!
Model X IRS 100% Deduction “Hummer Loophole” - 2018 Edition
Basically, here's a summary below. Contact me via PM for any questions about this:
I had been on the Model 3 list for a long time and had been getting VERY impatient about the delayed arrival of the $35,000 model (which likely won't qualify for the federal $7500 tax credit). Then I heard that because I'm a small business owner and would be using the vehicle mostly for business (especially in its first year), I now would be eligible for an immediate 100% federal tax deduction on the Model X (but not Model 3 or Model S) because the IRS characterized the Model X as a heavy industrial vehicle (>6000 pounds GVWR weight, intended for actual equipment like farm tractors or delivery trucks but this is a loophole). With this, plus state tax deduction, plus the $7500 federal tax credit, a LOADED Model X (with FSD and EAP and premium seats etc!) came out CHEAPER than a Model 3, plus I could get it NOW and (with referral code from existing Model S or Model X owner) get free unlimited Supercharger access for life (not available for Model 3). I called my tax attorney who confirmed I could do it, and I did. NO brainer. Here's the math to show what happened before 2018 and during/after 2018 with new Trump tax plan:
First, the federal tax credit of $7500 will now be available 100% if you take delivery by end of September 2018. That's a certainty.
For the federal 100% depreciation/deduction, let's assume a $100,000 car and 100% documented business use to make the math easy (lower business use and you lower the percentage write-off, so for the rest of 2018, keep another car and try only using the X for business uses).
PREVIOUSLY (before Trump tax plan was passed), you would get:
Section 179: $25,000 deduction
50% Bonus Depreciation (50% of remainder, which is $75,000): $37,500 deduction (so far deduction is $25k + $37.5k = $62,500 deduction)
Regular depreciation (1/5 of the remaining $100k-$62.5k) = $7500 (with $7500 federal deducted each of the next 4 years as well)
TOTAL DEDUCTION IN 2017: $70,000 (with the remaining $30,000 spread over the next 4 years, based on % business use).
As of 2018, with the NEW tax bill, which CHANGED the 50% bonus depreciation to 100% bonus depreciation, you now get:
Section 179: $25,000 deduction
100% Bonus Depreciation (1000% of remainder, which is $75,000): $75,000
Regular depreciation: Not applicable!
TOTAL DEDUCTION IN 2018: $100,000 in full - immediate, no depreciation needed aside for the state income tax component, which is way less than federal.
So what is new is the 100% bonus depreciation. You can't be an employee and can't use it for commute from home to a regular work place, but you can for anything else that is legitimate business related for a business you personally own (sole proprietor or other pass through entity).
Send me a private message if I can be of help. There are many threads on Tesla Motors Club about this and many many small business owners like me who have gotten a loaded Model X for LESS than a Model 3, without having to wait. Look into it, talk to your tax adviser, and let me know if there's anything I can answer for you from a non-CPA perspective. Good luck!
