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Steer past roadblocks to vehicle deductions

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in Small Business Tax Deduction Strategies

There’s one tax loophole on the books that’s large enough to drive a truck through … literally. Now it’s even “bigger and better” than before.

Strategy: Buy a heavy-duty sport utility vehicle for your business. Due to a provision in the new 2010 Tax Relief Act, you can write off most or all of the cost of an SUV placed in service this year—without the usual restrictions.

But you should move fast if you’re in the market for a new business vehicle. Congress may act soon to undo the unexpected windfall created by the new tax law.

Here’s the whole story: Under Section 179 of the tax code, you can deduct up to $500,000 of the cost of qualified business property placed into service in tax years beginning in 2010 and 2011. But the Section 179 deduction is limited by strict rules for “luxury cars.”  The luxury car limits generally apply to passenger vehicles with an unloaded gross vehicle rating (GVR) of 6,000 pounds or less.

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