$25,000-60,000+ tax deduction for JLUR 3.0L Diesel (GVWR just over 6,000 pounds)

JLURD

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@kre62 mentioned this in the TFL thread, but missed the fact that the Rubicon 3.0s will tip the GVWR just over 6k. Anyone planning to use section 179 on their JLUR 3.0 purchase?

Details:
https://seekingalpha.com/article/4306378-fiat-chrysler-jeep-introduces-25000-wrangler-tax-deduction

Fiat Chrysler: Jeep Introduces The $25,000 Wrangler Tax Deduction

Summary

  • If gross vehicle weight (GVW) is more than 6,000 lbs, a business can deduct $25,000 in first year depreciation called Section 179.
  • Until now, the Jeep Wrangler has been below 6,000 lbs, thus ineligible for the $25,000 deduction.
  • With the new diesel Jeep Wrangler in the Rubicon trim, it becomes the first and only Wrangler variant to tip the 6,000 lbs scale.
  • This will drive business owners to the Jeep Wrangler like never before, increasing sales for FCA of its highest-priced Wrangler version.
  • 10,000 additional Jeep Wrangler Rubicon diesel units sold at $57,000 each would mean $570 million in sales.
More details on the Section 179 tax deduction: https://www.section179.org/section_179_vehicle_deductions/





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kre62

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Oh nice, wasn't sure it'd actually happen. Also, it's more than 25k, can take year 1 bonus depreciation as well. It ends up being like 80% of msrp in year 1.
 

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Thanks for pointing this out. I use my vehicle 100% for business; carrying around parts and tools driving place to place fixing medical equipment. Did a quick read it looks like I’ll have to open a business name and finance in that new business name but, that shouldn’t be a problem. Biggest obstacle I see is making sure I get it by the end of the year LOL ordered Nov 4
 

oceanblue2019

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Oh nice, wasn't sure it'd actually happen. Also, it's more than 25k, can take year 1 bonus depreciation as well. It ends up being like 80% of msrp in year 1.
Just have to prove it's >50% business use. Depending on what you do that can be easy or not.
 

Adamoni

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This is awesome financially speaking. Once you claim it you can't sell it within something like 5years or IRS will want their money back. I have appointment monday with my tax guy to make sure I have my ducks lined up to take advantage of this. Thanks again for pointing it out. Probably will have to claim it next year because not foreseeing me getting my 3.0 in 2019.
 
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JLURD

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This is awesome financially speaking. Once you claim it you can't sell it within something like 5years or IRS will want their money back. I have appointment monday with my tax guy to make sure I have my ducks lined up to take advantage of this. Thanks again for pointing it out. Probably will have to claim it next year because not foreseeing me getting my 3.0 in 2019.
If it makes you feel any better, no dealer or individual with a sold order will be taking delivery of a 3.0 in 2019. Either way, between the initial $25,000 deduction and the new-vehicle bonus depreciation deduction, most folks will be well over $10k in tax savings for 2020.
 

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This is great news about the GVWR. I used this deduction for my Raptor two years ago.
 

9mmkungfu

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I usually pay someone else to do my taxes. Is there a good site I can reference to do some more reading on this incentive?
 

Germansheperd

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Its fine if you own a business and/or putting it in a business name. Doesn’t apply to 95% of the retail customer orders.
 

Adamoni

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Its fine if you own a business and/or putting it in a business name. Doesn’t apply to 95% of the retail customer orders.
This is a very good point but if it does apply, I think it is more than fine it is awesome. Literally $5,000-$10,000 in my pocket. Unless I'm misunderstanding something.
 
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JLURD

JLURD

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This is a very good point but if it does apply, I think it is more than fine it is awesome. Literally $5,000-$10,000 in my pocket. Unless I'm misunderstanding something.
You’re not...and the title of this thread, according to my CPA, is actually underestimating the deduction unless you’re claiming 51% work-use of the vehicle. Apparently under new tax law, the entire MSRP of a new vehicle (SUVs included) can be deducted via first year bonus depreciation after the TCJA went into effect. For some of us, that’s north of a $60k deduction.
 

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This is a super interesting deduction that would make buying a diesel significantly more interesting. But correct me if I'm wrong here, the real benefit to section 179 is that is allows you to take the deduction up front in one year vs having to spread it over multiple years - something you could do with just about any vehicle (including a normal jeep).

What I mean is, with any vehicle (e.g. normal gas JL), you can title it under a company name (or even your own name as a sole proprietor) then depreciate it annually for each year you use it for business purposes. Repeat this until some point when you fully depreciate it. An example would be if I take my gas JL and register as an Uber driver - I would then be able to deduct depreciation of my JL. I wouldn't even really need to pick anyone up - just set my work and home as desired destinations for my daily commute. Maybe pick up an odd passenger here or there. But in this case, it would take 5 years to fully depreciate the JL.

With section 179 it seems that if I register it under a business name, I could potentially get the depreciation all up front if I can somehow ensure the JL diesel can be used for business purposes over 51% of the time. This method would have a higher NPV since you're getting all the value in year 1 and saves some clerical headache in years 2-5. But its not really a difference of $0 savings vs $10k+ savings.

So let's assume you're doing super well and are in the 35% fed tax bracket and you bought a maxed out $60k JL diesel. The 179 deduction would have an NPV of $21k vs the annual depreciation route NPV of $17k (difference of $3.9k) assuming 8% expected return. If you're a poor schlub who's in the 24% tax bracket, then you'd be looking at a $2.7k difference (like geeze, who only makes $160k/year - joking of course).

Am I understanding that right or am I missing something about section 179?
 
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This is a super interesting deduction that would make buying a diesel significantly more interesting. But correct me if I'm wrong here, the real benefit to section 179 is that is allows you to take the deduction up front in one year vs having to spread it over multiple years - something you could do with just about any vehicle (including a normal jeep).

What I mean is, with any vehicle (e.g. normal gas JL), you can title it under a company name (or even your own name as a sole proprietor) then depreciate it annually for each year you use it for business purposes. Repeat this until some point when you fully depreciate it. An example would be if I take my gas JL and register as an Uber driver - I would then be able to deduct depreciation of my JL. I wouldn't even really need to pick anyone up - just set my work and home as desired destinations for my daily commute. Maybe pick up an odd passenger here or there. But in this case, it would take 5 years to fully depreciate the JL.

With section 179 it seems that if I register it under a business name, I could potentially get the depreciation all up front if I can somehow ensure the JL diesel can be used for business purposes over 51% of the time. This method would have a higher NPV since you're getting all the value in year 1 and saves some clerical headache in years 2-5. But its not really a difference of $0 savings vs $10k+ savings.

So let's assume you're doing super well and are in the 35% fed tax bracket and you bought a maxed out $60k JL diesel. The 179 deduction would have an NPV of $21k vs the annual depreciation route NPV of $17k (difference of $3.9k) assuming 8% expected return. If you're a poor schlub who's in the 24% tax bracket, then you'd be looking at a $2.7k difference (like geeze, who only makes $160k/year - joking of course).

Am I understanding that right or am I missing something about section 179?
IIRC, you are correct. And yes, holding on to that money now rather than distributing it over several years of depreciation deductions will have different values to different people. At a minimum, it’ll pay for the inevitable new DPFs these things will need, assuming it’s not deleted upon failure.
 

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