One item not yet discussed - a hybrid Wrangler will have a GVWR of 6000+ pounds, qualifying it for a big tax giveaway: Section 179

JandS

Well-Known Member
Joined
May 20, 2016
Messages
114
Reaction score
106
Location
Midwest
Vehicle(s)
4xe | Exige S | R wagon | V Wagon | MB S65
The TL;DR of 179 is that, if you own a business, you can (for all practical purposes) depreciate the entire purchase price immediately. That means if you pay $60,000 for the vehicle, you get to use it as an immediate $60,000 expense.

This alone will sell quite a few of them.





Advertisement

 

Fikestrel

Member
Joined
Aug 14, 2020
Messages
16
Reaction score
41
Location
Maryland
Vehicle(s)
Jeep Cherokee KL
It looks like that is partially true. You can deduct $25,000 of the expense, but only if you are using it more than 50% for business. Remember that it is a DEDUCTION, so depending on your tax bracket, you only decrease your tax burden by 20%-40% of that $25,000. So it might be something in the magnitude of a $5,000 - $10,000 tax savings. That's nothing to sneeze at, but it's nothing like $60,000 and remember that you are still spending $50,000 or $75,000 (whatever the PHEV jeep ends up costing) to get that relatively small tax "savings."

They changed this to address the "SUV Loophole," AKA the "Hummer Loophole."

This is different than the $7,500 electric vehicle tax credit that is taken directly off your tax bill.

More info here: https://www.section179.org/section_179_vehicle_deductions/
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
I was discussing with someone on one of the recent threads, it only needs like 150-200 lbs to clear the 6,000 which I imagine it will.
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
It looks like that is partially true. You can deduct $25,000 of the expense, but only if you are using it more than 50% for business. Remember that it is a DEDUCTION, so depending on your tax bracket, you only decrease your tax burden by 20%-40% of that $25,000. So it might be something in the magnitude of a $5,000 - $10,000 tax savings. That's nothing to sneeze at, but it's nothing like $60,000 and remember that you are still spending $50,000 or $75,000 (whatever the PHEV jeep ends up costing) to get that relatively small tax "savings."

They changed this to address the "SUV Loophole," AKA the "Hummer Loophole."

This is different than the $7,500 electric vehicle tax credit that is taken directly off your tax bill.

More info here: https://www.section179.org/section_179_vehicle_deductions/
6 words...

Bonus Depreciation. Talk to a CPA.
 

Fikestrel

Member
Joined
Aug 14, 2020
Messages
16
Reaction score
41
Location
Maryland
Vehicle(s)
Jeep Cherokee KL
6 words...

Bonus Depreciation. Talk to a CPA.
Wow. I looked again, and you’re right. I didn’t know that they reopened the “hummer loophole.” That’s a shame. It isn't meant for these kinds of vehicles. They intend it for work vehicles like pickups and tow trucks that are needed because of their size.
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
Wow. I looked again, and you’re right. I didn’t know that they reopened the “hummer loophole.” That’s a shame. It isn't meant for these kinds of vehicles. They intend it for work vehicles like pickups and tow trucks that are needed because of their size.
giant corporations get so many tax breaks and benefits, let us little guys get a tiny win like this once in a while.
 

BearJewJonny

Well-Known Member
First Name
Jon
Joined
Jan 4, 2018
Messages
373
Reaction score
413
Location
NYC
Vehicle(s)
2018 JlU Sahara
So how does the little guy without a business take advantage of this?
 

BearJewJonny

Well-Known Member
First Name
Jon
Joined
Jan 4, 2018
Messages
373
Reaction score
413
Location
NYC
Vehicle(s)
2018 JlU Sahara
So I just gotta make a business. Easy enough.
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
So I just gotta make a business. Easy enough.
Start a business that makes $60,000+ profit so there is something to write off, yes. And have something that you can justify the car... (i.e. deliveries or something)
 
OP

JandS

Well-Known Member
Joined
May 20, 2016
Messages
114
Reaction score
106
Location
Midwest
Vehicle(s)
4xe | Exige S | R wagon | V Wagon | MB S65
  • Thread starter
  • Thread Starter
  • #11
So how does the little guy without a business take advantage of this?
It is ultimately a giveaway to business owners. My FIL does it every year, failing to account for the sale of the asset - the IRS doesn't have the means to track the asset after the first year, again by design. The taxpayers are paying my FIL to buy a new King Ranch each year.
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
It is ultimately a giveaway to business owners. My FIL does it every year, failing to account for the sale of the asset - the IRS doesn't have the means to track the asset after the first year, again by design. The taxpayers are paying my FIL to buy a new King Ranch each year.
Well he should be reporting the sale of the asset when he sells it or trades it in, which nullifies that amount on the purchase of the new one each year...
 
OP

JandS

Well-Known Member
Joined
May 20, 2016
Messages
114
Reaction score
106
Location
Midwest
Vehicle(s)
4xe | Exige S | R wagon | V Wagon | MB S65
  • Thread starter
  • Thread Starter
  • #13
Well he should be reporting the sale of the asset when he sells it or trades it in, which nullifies that amount on the purchase of the new one each year...
"Should." The IRS doesn't currently track 179 assets to see if they've been sold, again the lack of enforcement is by design.
 

KSpider

Well-Known Member
First Name
Noah
Joined
Aug 16, 2020
Messages
135
Reaction score
350
Location
Escondido, CA
Vehicle(s)
Audi E-tron (x2) ’21, Rubicon 4xe Nacho (on order)
"Should." The IRS doesn't currently track 179 assets to see if they've been sold, again the lack of enforcement is by design.
I don't think my CPA would allow me to do that : )
 
OP

JandS

Well-Known Member
Joined
May 20, 2016
Messages
114
Reaction score
106
Location
Midwest
Vehicle(s)
4xe | Exige S | R wagon | V Wagon | MB S65
  • Thread starter
  • Thread Starter
  • #15
I don't think my CPA would allow me to do that : )
Nor should they. It is against the law, it is just one that isn't being enforced, by design.

My favorite 179 fact involves the Volvo XC90, which had a GVWR of 5700 (max) for several years before they realized "if we change the sticker to 6050, we sell more of them," so that is what they did. No change in the vehicle, just the sticker.
 

Advertisement




Quake LED
 



Advertisement
Top