Section 179 - does mileage matter?

[Tigers]

Does mileage matter for section 179 qualification?

I own my business and I have one client in town that I visit twice a month for around 30 miles total driving, so it would only be ~2,000 miles for the year once they go back in office likely June/July.

So, can I buy a model X, park in in my driveway and basically never touch it except the 2-3 times a month I see my client and then at the end of the year, write it off 100% and on Jan 1 2022 be able to use it freely as a normal daily driver?

Also, can I just buy the car in December only put ~50 miles on it and then write it off 100%?

 

[Pstreicher1]

I would talk to a cpa tax guy about that. From what I got back from my tax guy is I would have to use a five year depreciation schedule on it.
In addition you would track and log mileage to be able to deduct the cents per mile offered by the IRS. Not sure if it is still fifty five cents a mile or not.
I wish I knew more about this myself but it's complicated. That's why we have Cpa's I guess to do our sometimes complicated tax returns.

Edit: Here's what I found just now from Investopedia searching for 'Section 179.
'Section 179 of the IRC allows businesses to take an immediate deduction for business expenses related to depreciable assets such as equipment, vehicles, and software. This allows businesses to lower their current-year tax liability rather than capitalizing an asset and depreciating it over time in future tax years.'

I'm sure there is more to this...as I read on...

Well, here's the caveat of this...

'Equipment, vehicles, and/or software purchased under Section 179 must be used for business purposes more than 50% of the time to qualify for the deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.'

 

[jboy210]

Does mileage matter for section 179 qualification?

I own my business and I have one client in town that I visit twice a month for around 30 miles total driving, so it would only be ~2,000 miles for the year once they go back in office likely June/July.

So, can I buy a model X, park in in my driveway and basically never touch it except the 2-3 times a month I see my client and then at the end of the year, write it off 100% and on Jan 1 2022 be able to use it freely as a normal daily driver?

Also, can I just buy the car in December only put ~50 miles on it and then write it off 100%?

I am interested to see what your CPA says. Ours told us not to do it for our business, consulting. Instead, we just write off the percentage of annual expenses (lease, insurance, maintenance, etc), based on the vehicle's use for business.

 

[laceyboy]

You can check with your CPA but from my experience, you can claim up to 100% of your paid MX price with Section 179 given you use your vehicle for business purposes.
Once you claimed Section 179, you CANNOT claim your mileage deduction for that vehicle.

 

[mattack4000]

You can claim anything you want. Is it legal or illegal, that's a different matter. If the car is truly a company car, your use of it could be consider taxable income

 

[ithinkmac]

if memory serves. You can make a full claim on 1st year, then the next year, you can switch to mileage if you choose or continue to claim cost of use/operation. You are allowed 1 changed after the 1st year. This was a couple of years ago. Not sure if 179 remains the same, they seem to change 179 every year or 2. Or maybe this applied to me on a particular year. Check with your CPA.

-ThinkMac-

 

[mattack4000]

if memory serves. You can make a full claim on 1st year, then the next year, you can switch to mileage if you choose or continue to claim cost of use/operation. You are allowed 1 changed after the 1st year. This was a couple of years ago. Not sure if 179 remains the same, they seem to change 179 every year or 2. Or maybe this applied to me on a particular year. Check with your CPA.

-ThinkMac-

Depreciation recapture?

 

[SKinOC]

if memory serves. You can make a full claim on 1st year, then the next year, you can switch to mileage if you choose or continue to claim cost of use/operation. You are allowed 1 changed after the 1st year. This was a couple of years ago. Not sure if 179 remains the same, they seem to change 179 every year or 2. Or maybe this applied to me on a particular year. Check with your CPA.

-ThinkMac-

You want the 168 deduction which gives you a 100% accelerated/bonus deduction if it's a business vehicle - hence the timing to put the SUV in service in service in service in December, and keep records. Once you take depreciation, you can't take standard mileage deductions since that has a depreciation factor baked in.
You should pay the business for personal use of the auto or take the usage as a taxable fringe benefit. Selling the car later is from a $0 basis and will create income for the business.

 

[Ron97062]

Does mileage matter for section 179 qualification?

I own my business and I have one client in town that I visit twice a month for around 30 miles total driving, so it would only be ~2,000 miles for the year once they go back in office likely June/July.

So, can I buy a model X, park in in my driveway and basically never touch it except the 2-3 times a month I see my client and then at the end of the year, write it off 100% and on Jan 1 2022 be able to use it freely as a normal daily driver?

Also, can I just buy the car in December only put ~50 miles on it and then write it off 100%?

Yes, exactly. You can also buy the vehicle the last week of December, use if 100% for business until the end of the year, and deduct 100% of the vehicle. Miles driven does not matter, only the ratio of business to personal use. But in successive years, if your business use goes to 50% or below, then you'll be subject to recapture so don't let that happen.

IMPORTANT: You posted this to the Model X forum, and my answer is correct for the X. Models S/3/Y do not qualify for section 179 because the vehicle's GVRW must be greater than 6000 lbs. Edited to add this warning.