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Originally Posted by DinanX5
By the way, what is this 179 deduction???
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I'll give you the cliffs notes version: Section 179 is a clause in the IRS code that allows people who own their own businesses (small businesses -- I believe less than $400K a year in earnings?) to write off machinery expenses. It's been in the code for years! However, when GWB and Congress passed that huge tax brea back in '02(?) they made some changes to Section 179. For example:
-- A small business could now write off up to $100K of the cost of a vehicle IF:
- The vehicle is used 100% of the time for businesses (and not less than 60%, I believe). This, by the way, was not verified by anyone.
- The vehicle has a Gross Weight Rating (GWR) of 6,000 lbs. Now, GWR means what the vehicle weighs WHEN FULLY LOADED. (The X5's GWR, by the way, is 6005 lbs. Coincidence? You decide
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- You must keep the vehicle for no less than three years.
- Many more provisions... you get the gist.
Depending on whom you ask, this was either a way to help small businesses (to purchase delivery vans or tractors, for example), OR a huge loophole for rich people given to them by the Republican-dominated government. The truth, as with most things in politics, is probably somewhere in the middle. Section 179 allowed folks to purchase large SUVs, take that expense off their income, and therefore pay less in taxes. Thousands of self-employed people (including me) rushed to buy SUVs, and why not? After dealer rebates, negotiation and Section 179 tax savings, I paid for my X5 what I would have paid for a Honda Accord!
Alas, this did not last long. The backlash and criticism was so intensive that Congress repealed the changes it had made to Section 179, and as of 1/01/05 this is no longer avialable. (Well, it is. It's just back to the original $25K instead of $100K, and I think they increased the minimum GWR that can be used to qualify.)
That's about it... I don't think I screwed up too much in my explanation.
Juan