For All Of You Section 179 X Drivers:

[rangerfan]

I talked to my accountant about my Section 179 X and though some of your might be interested in his response. I was considering selling the car in the next year to get something with a third row (*cough e70 cough*), but I think he talked me out of it, and I'll make due until December 2008 when my current ride will be 5 years old.

Here is his reply:

"Generally, if the vehicle were retired within 5 years of the time it was placed in service, we would have to recapture the excess 179 deduction over the amount we would have taken had we depreciated the vehicle over the same time. After 3 years of service, the recapture would be about 30% of the original cost. A sale also results in any gain being treated as ordinary income."

[drfred]

I know. My 2004 X is paid for, but it looks like my accountant knows yours
because I got the same message.
Fred

[Juanted]

Yup! Your accountant is right. I knew that when I bought my X back in '03 using Section 179. Gotta do your homework, and it looks like you have.

Juan

[AutoXer]

Yep, he's exactly correct. There is no free ride in the tax code! The only benefit was that we got to expense the whole amount in one year. It works for me.

[rangerfan]

Well, it isn't a total loss. You can still trade in the X for a new ride--you just have to carry over your basis to the new ride. I think. In any event, I am on the list for both a new X5 and a new loaded MDX. The MDX is probably going to win out--I want to use the left over cash for a fun car.