Time running out for Model X 2017 *massive* business-use tax deduction

[shanejackson]

how does this apply to a lease or purchase but making payments?

 

[dmunjal]

how does this apply to a lease or purchase but making payments?

Has to be purchase to take advantage of depreciation deduction. Leasing has its own tax benefits if written off as a business expense.

 

[MelaniainLA]

how does this apply to a lease or purchase but making payments?

Yep. Can’t be lease but purchase can be on loan. You get the full deduction upfront plus interest deduction every subsequent year! PM me for more info

 

[jtdiddy]

Yep. Can’t be lease but purchase can be on loan. You get the full deduction upfront plus interest deduction every subsequent year! PM me for more info

@MelaniainLA , when u did ur taxes, did you use sec 179 at all? @cpa makes a point that with the the new 100% upfront deduction under new tax laws, it makes sec 179 unnecessary.

 

[MelaniainLA]

@MelaniainLA , when u did ur taxes, did you use sec 179 at all? @cpa makes a point that with the the new 100% upfront deduction under new tax laws, it makes sec 179 unnecessary.

Yeah his comments are very on-point. However, as someone whose screen name here should be non-CPA, I just relied on whatever TurboTax encouraged me to do without paying precise attention to the specific tax section taken advantage of — all I remember now is that the full amount went through. I’d leave the specific codes up to the pros — in any event, if you use it legit for business, you should get the full write off up to the % business use for that first year...

 

[3 G's]

@MelaniainLA, so my X was delivered on 9/20 hence I cannot take the 100% deduction which is fine. If I sell my X this year, I understand there is a recapture but if I buy another X, could I take the 100% deduction ? Thanks.

 

[MelaniainLA]

@MelaniainLA, so my X was delivered on 9/20 hence I cannot take the 100% deduction which is fine. If I sell my X this year, I understand there is a recapture but if I buy another X, could I take the 100% deduction ? Thanks.

Yep that should be the case! Confirm with CPA of course before making such a big financial move.

 

[jdrizzo89]

Let’s say theoretical you make $10k from your part time business and $90k from your full time job. Could the X be written off to offset your total liability ($100k) or just the $10k from the part time business?

 

[MelaniainLA]

Let’s say theoretical you make $10k from your part time business and $90k from your full time job. Could the X be written off to offset your total liability ($100k) or just the $10k from the part time business?

I think only the $10k. Ask accountant. @cpa ?

 

[imthiazah]

I think only the $10k. Ask accountant. @cpa ?

I followed your original post back in 2017 and got my Model X delivered on Dec 22 2017 and claimed 100% for business.

Hi everyone,

As some of you are aware from previous threads here and on Forums and Reddit, because the Model X has a weight (GVWR, which is printed on a sticker on inside of frame on driver's door) of greater than 6000 lbs, it qualifies as a commercial heavy-duty vehicle, not as a passenger car. As a result, IF YOU TAKE DELIVERY (not place order but actually RECEIVE and USE the car) in 2017 (even as late as December 31, 2017), you get to depreciate a massive amount of the car's purchase price.

There is a great article at: Section 179 Vehicle List: Deductions For Heavy Vehicles

There are more articles on this at: Tesla Model X GVWR Is 6,768 Pounds - Vehicles Qualifies For $25,000 Business Tax Deduction and The tax loophole that can save you big bucks off a Tesla Model X

The Model S is under 6000 lbs GVWR, so it doesn't qualify.

Per the article:

"
You can obtain a substantial first-year deduction if your business car isn’t a “passenger vehicle.”

Example: Sheila pays $100,000 for an SUV [Average price of a Model X] with a gross loaded vehicle weight of 7,000 pounds. Because it weighs more than 6,000 pounds, it is not a “passenger automobile.” Yet, it is subject to the $25,000 limit on the Section 179 deduction for SUVs. Terry uses the SUV 100% of the time for her travel guide business. She may deduct the following amounts for 2014 [holds true for 2017 as well, when the 50% bonus depreciation will cease to exist]:

Section 179 Deduction $25,000
50% Bonus Deduction $37,500 (50% of the $75,000 basis)
Regular Depreciation $7,500 (20% x %37,500 remaining basis)
Total $70,000

Terry can depreciate the remaining $30,000 of the $100,000 over the next several years using regular depreciation.


This seems like a great deal for people who want to buy heavy (and expensive) SUVs. Keep in mind, the deduction is proportional to the amount of time you use the vehicle for business. If Sheila used the SUV 40 percent of the time for personal, she’d only receive a $42,000 deduction for the year.

To qualify for the Section 179 vehicle deduction and bonus depreciation, you must use it for business more than 50 percent of the time. This is true for the full five-year depreciation period that applies to vehicles. If your use dips below 50 percent during any of that five-year period, you’ll have to repay your deduction and bonus depreciation. That’s why it’s vital to track your business mileage, no matter what method you’re using to take a deduction."


I called my tax attorney and was told that if I take delivery near the end of 2017 and am careful to use the car SOLELY for business use, as a small business owner, I could legally take 100% business use on my taxes, or reduce that perfecta accordingly if I do use it for personal things here and there.

So if you're on the fence, this is a great time to order it because you would need a couple months of lead time to receive the car (unless you purchase Inventory car) and of course some time to consult your tax adviser. You'll get yourself (rather, your business) a nice Christmas gift, save on gas and maintenance, and enjoy the thrill of a Tesla.

Happy to discuss with anyone -- you can PM me here or email me hdhemmati at gmail dot com. And also happy to privately send you a referral code if you need one, and can introduce you to an all-star OA here in Los Angeles area who can help you find the ideal Model X. Happy shopping!

I followed your original post back in 2017 and got my Model X delivered on Dec 22 2017 and claimed 100% for business. However, my tax guy did not allow me to claim $7500 federal limit (more like $1500) as I was claiming 100% for business. 2 tax seasons later I am seeing an overall benefit of about 17k in savings on a 100k car pre tax. Does this align with your savings?

 

[mongo]

I followed your original post back in 2017 and got my Model X delivered on Dec 22 2017 and claimed 100% for business. However, my tax guy did not allow me to claim $7500 federal limit (more like $1500) as I was claiming 100% for business. 2 tax seasons later I am seeing an overall benefit of about 17k in savings on a 100k car pre tax. Does this align with your savings?

I'm not an accountant, however...
I think your tax guy messed up. I believe you could have gotten the $7,500 EV credit, subtracted that from the basis, and then claimed the rest via Hummer depreciation. No idea how they go to $1,500....

 

[MelaniainLA]

I'm not an accountant, however...
I think your tax guy messed up. I believe you could have gotten the $7,500 EV credit, subtracted that from the basis, and then claimed the rest via Hummer depreciation. No idea how they go to $1,500....

Agreed. Some tax people are unaware. I would have another CPA review and refile as needed

 

[Xenoilphobe]

Not sure. Don’t think so but easy to look up. Let us know what you find!

Only the P100D with jump seats - it exceeds 6000 lbs GVWR

 

[nomad415]

I am thinking of buying a used Model X from the used car program tesla.com. its a 2017 Model X 75D. The GVWR on the door is 6591 LB. It's clearly higher than 6000 Lbs. Can I take the section 179 deduction on it ? Have any rules change since this thread started in 2017 ??

 

[MelaniainLA]

I am thinking of buying a used Model X from the used car program tesla.com. its a 2017 Model X 75D. The GVWR on the door is 6591 LB. It's clearly higher than 6000 Lbs. Can I take the section 179 deduction on it ? Have any rules change since this thread started in 2017 ??

Yes. Rules changed and used now eligible.

 

[nomad415]

Yes. Rules changed and used now eligible.

Thanks for the response. The cost of the used one is 70k, and we will be using it for our real estate business. Can we write off rental income against this cost? I will be doing my taxes in april 2020 using turbo tax home and business, what IRS form should be used to get this section 179 deduction?

 

[BenBethel]

"New to You" is the key..... this is how the Model X can be far less expensive than the Model S. I always tell people "when you look at the price of the car, think of a Model 3 as being about the same cost of ownership as a car half the price... a Model S as being about the same as a car 40% less expensive... a Model X the same as a car about 60% less expensive if you qualify for the deduction." I sat down with my CFO and CPA and we think my used $106K Model X P100DL+ with FSD was pretty darn close to the same cost as a $35K Toyota 4-Runner over 5 years of ownership. Before that, my Model S P90DL was even better though... I got it from Tesla with 2970 miles on it for $655/mo on a lease... but it was a total fluke!

I still say the same to so many people - find a used Model S from Tesla's site and you could be enjoying a faster, safer, more reliable, longer-lasting and more luxurious vehicle for about the same price as you'd pay for a new Honda Civic or new Toyota Corolla, and you'll be able to drive in the diamond lanes..... which instead of HOV lanes should really start being HEV lanes - high efficiency vehicles makes more sense because two people in a motorhome or giant truck or 8mpg old cadillac can use HOV lanes.... the purpose of those is to reduce traffic AND clean the air. Same goes for license fees and sales taxes - move all of that to the gas tax and have those who drive more and drive inefficient vehicles pay the penalties. If I choose to buy a safe, expensive, efficient car I shouldn't be penalized by a tax on the purchase and license plates for the vehicle if it sits around not being used. We're currently rewarding people for living really far away from their work it seems...

Thanks!
Ben

 

[nomad415]

I purchased the turbotax home and business software for 2019 to figure out how the entire model X purchase can be deducted. It's complex, I am going to seek a CPA. but here is a link to IRS doc that outlines the laws around section 179 and 168(k)......https://www.irs.gov/pub/irs-pdf/p946.pdf

 

[Uncle Paul]

This may be one reason that the X is currently ourselling the S.

X is a tremendous business vehicle. Great tax benefits, easy to drive, lots of cargo capacity with seats folded down. Tows up to 5,000 lbs, smooth and quiet highway long distance cruising, low maintenance, free supercharging and those falcon wing doors make loading and unloading from the sides super easy on the back.
Gives us someting to talk about when taking clients out to lunch/dinner.

I have an eco oriented business (remanufactured toner cartridges) and this car fits our image to a "T"

After taxes it cost less than a Model 3.

 

[Simon21]

"New to You" is the key..... this is how the Model X can be far less expensive than the Model S. I always tell people "when you look at the price of the car, think of a Model 3 as being about the same cost of ownership as a car half the price... a Model S as being about the same as a car 40% less expensive... a Model X the same as a car about 60% less expensive if you qualify for the deduction." I sat down with my CFO and CPA and we think my used $106K Model X P100DL+ with FSD was pretty darn close to the same cost as a $35K Toyota 4-Runner over 5 years of ownership. Before that, my Model S P90DL was even better though... I got it from Tesla with 2970 miles on it for $655/mo on a lease... but it was a total fluke!

I still say the same to so many people - find a used Model S from Tesla's site and you could be enjoying a faster, safer, more reliable, longer-lasting and more luxurious vehicle for about the same price as you'd pay for a new Honda Civic or new Toyota Corolla, and you'll be able to drive in the diamond lanes..... which instead of HOV lanes should really start being HEV lanes - high efficiency vehicles makes more sense because two people in a motorhome or giant truck or 8mpg old cadillac can use HOV lanes.... the purpose of those is to reduce traffic AND clean the air. Same goes for license fees and sales taxes - move all of that to the gas tax and have those who drive more and drive inefficient vehicles pay the penalties. If I choose to buy a safe, expensive, efficient car I shouldn't be penalized by a tax on the purchase and license plates for the vehicle if it sits around not being used. We're currently rewarding people for living really far away from their work it seems...

Thanks!
Ben

Your numbers are way off. First of all, do you get the same deduction for the 4 runner? Unless you're driving 20,000 miles per year, I don't see how that's possible, because I'm sure you're considering gas savings to get there. Another thing most people over estimate is the gas savings. The performance X gets less than 3 miles per kwhr. The calculation your car displays doesn't take into account phantom drain, and most people think their car is more efficient than it really is. It's closer to 2 miles per kwhr. When you get an electric car, your electric rate goes into the next tier and you're paying more.

Also, people don't take into consideration that once you sell the car, you have to pay income tax. If you sell before a certain time, you have to pay back the deduction. You have to take all that into consideration.