LOGAN TOWNSHIP, N.J. - According to the U.S. Internal Revenue Code (IRC), Section 179, a taxpayer may elect to treat the cost of any qualifying property as an expense, rather than a depreciable capital asset. Using this tax code provision, business owners may be able to deduct the full purchase cost of a qualifying work truck (GVWR = 14,000 lb. or more), up to the $250,000 limit applicable to tax years 2008 and 2009. The deduction must be taken in the year the vehicle is placed in service. For tax year 2010, the maximum deduction is scheduled to revert to the 2007-level of $125,000.
Time is short, but the potential benefit is large. Those considering the purchase of a new commercial truck should certainly consider the tax implications of buying this year versus postponing the purchase until next year or later.
IRC Section 179 contains a number of limitations and provisions that may affect the extent to which any business can deduct any specific purchase. Consequently, business owners should consult their own tax advisers and accountants regarding their individual situation and the applicability of IRC 179 to it.