How to write off FULL value of a new business vehicle in 2020 | Section 179 explained.
What is Section 179? How does section 179 work? In this video I show you three ways that you can use section 179 of the tax code to write off the full purchase price of a new vehicle or buy use the deduction to finance the purchase. (Section 179 expense deduction) IRS Section 179 Depreciation Deduction Overview explained in plain English (IRS Publication 946)
- If you own your own business or want to start your own business this may help you reduce your taxable income.
- Even if you are not an accountant this will give you some insight to the type of tax advantages business owners have, because the tax code is primarily written for business owners and people who create businesses.
This is an elections allows you to accelerate depreciation on eligible assets. It allows you (the business owner) to take a greater tax expense deduction (Depreciation in this case) and thus it further reduces your business taxable income.
What property qualifies for section 179? Some Examples:
- Machinery and equipment.
- Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs.
- Gasoline storage tanks and pumps at retail service stations.
- Livestock, including horses, cattle, hogs, sheep
- Vehicles used in business you can take 179 up to a certain amount (see the rules)
What property does not qualify for section 179? Some Examples:
- Assets purchased and placed in service that are used to generate “rental” Income
- Land and land improvements
- Leased property (Yes and No) See Pub 941
What are the downsides of using Section 179 to purchase or finance a vehicle?
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IRS Pub 946- https://www.irs.gov/forms-pubs/about-publication-946
IRS pub 463- https://www.irs.gov/forms-pubs/about-publication-463
More info on section 179- https://www.section179.org