Section 179 tax credit...
 

With the lease numbers so crazy I'm considering buying the vehicle (4.8 $71K). Has anyone used the section 179 tax credit for the X5 as it qualifies for the >6000# GVW number? My dealer recommended it as I will use the vehicle mainly for business. Any thoughts? The dealer was also able to give me 2500 off the MSRP with all my crying:stickpoke

here's some info...don't know if it's changed since 2005, so check with your cpa or phester.

According to section 179 for 2006, maximum you can claim for first year is 25,000. Too bad they changed from 100,000 to 25,000.

Apparently you can also claim a depreciation for the "first year" which would add even more to this incentive before year end.:)

yeah.....you can write off $25K, plus 30% of the remainder as bonus depreciation, then 20% of the rest as regular depreciation. But if I remember correctly what my accountant said, the some of the depreciation is recaptured if you sell the car before it's useful life (which I think is 5 years)

I thought they removed the bonus depreciation which is 30%. I think you can still claim first year depreciation which is around $2000 plus the $25k...Let me know if I am wrong..

maybe they did, i don't know........not sure if they've changed that tax law since they reduced it from $100k to $25k.

Doesn't the weight need to be 6000 lbs or more for a section 179 credit?

It's not the actual weight of the vehicle from my understanding...but the GVW needs to be >6000#. The X5 is on several lists of qualifying vehicles and the vehicle apparently has labeling to state it qualifies as per the dealer.

My tax advisor told me the 179 works as long as you keep the vehicle for the length of time you specify it will be in service satisfying the business deduction. If you sell it or get rid of it early you must repay the balance of the deduction you took based on the time left.

thanks for clarifying ... I checked on the nhtsa website (nhtsa.dot.gov) ...
found the following:
"The Gross Vehicle Weight Rating (GVWR) is the amount recommended by the manufacturer as the upper limit to the operational weight for a motor vehicle and any cargo (human or other) to be carried."

For example, say you spend $60,000 in 2006 to buy a new Cadillac Escalade that is used 100% in your business. You can generally claim the following first-year deductions on your business's 2006 federal return: the $25,000 Section 179 writeoff plus $7,000 worth of regular depreciation [20% x ($60,000 - $25,000)]. So your first-year depreciation deductions add up to $32,000, or about 53% of the new Escalade's cost. This is a far better deal than if you spent the same $60,000 on a new BMW used 100% for business (in that case, your first-year depreciation writeoff would be limited to about $3,000 under the so-called luxury auto depreciation limitations).

source: http://www.smartmoney.com/tax/workbu...=smallbusiness

huh?? what is the difference between a bmw and escalade.... assuming the previous post is correct that the x5 counts as over 6000 lbs (can someone verify??), then there is no difference, right??

I don't think there's any diff between escalade and Bmw...As long as your vehicle GVW is 6000 lbs or more your first year depreciation is 25k...I don't know about the 20% depreciation for first year..Do we have any CPA on this forum that can clear this????

The luxury-automobile depreciation rules, as modified by the Job Creation and Worker Assistance Act of 2002, the Jobs and Growth Tax Relief Reconciliation Act of 2003 and revenue procedures 2003-75 and 2004-20, apply to vehicles that are used as a means for transportation on public roads, weigh 6,000 pounds or less and are not used to transport persons for hire.
Vehicles that have business use but do not meet these criteria are not subject to the depreciation limits imposed on luxury autos, but instead are depreciated according to the rules for equipment in general. A Hummer, for example, is not affected by the luxury-automobile rules because it is too heavy, so if it is used solely for business purposes, up to $100,000 of its total cost can be expensed due to IRC section 179’s immediate expensing rules. Similarly, up to $100,000 of the cost of a taxicab, a hearse or a forklift truck can be expensed in the first year since these vehicles do not meet the luxury-car criteria.
Luxury-vehicle classifications. Neither the 2002 nor the 2003 tax acts changed the first-year depreciation limit for used luxury cars. That limit is inflation-adjusted and was set by the IRS at $2,960 for 2004 (it was $3,060 for 2002 and 2003). The 2002 act increased the maximum first-year depreciation for only new cars; the 2003 act further increased this amount. Then revenue procedure 2004-20 (for vehicles placed in service in 2004) and revenue procedure 2003-75 (for vehicles placed in service in 2003) divided nonelectric vehicles into two categories: passenger vehicles, and trucks and vans on a truck chassis. For trucks and vans on a truck chassis, $300 was added to the passenger vehicle first-year deduction limit. Consequently, there now are six categories of luxury vehicles:
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif Used passenger cars.
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif Used trucks and vans on a truck chassis.
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif New passenger cars.
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif New trucks and vans on a truck chassis.
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif Used electric cars.
http://www.aicpa.org/pubs/jofa/aug20...s/blackbox.gif New electric cars.

so i guess its back to the 6000lb interpretation.

so now i'm completely confused. clearly the x5 does not weigh more than 6000 lbs. BUT, if it is listed as a gvw of 6008, does it then qualify?

how can we confirm?

X5 GVW does weight more than 6000 lbs so it does qualify.....

They go on GVW, so the X5 does qualify. I took it when I purchased the vehicle and my CPA concurred with no issues.

Trying to figure out where you got the GVWR for the 3.0 as 5,963lbs. and the 4.8 as 6173lbs. From the website you mention, the curb weight of the 3.0 is 5,115lbs with a payload capacity of 1,345lbs., which would give it a GVWR of 6,460lbs. Here are the specs. So it still should qualify.

Can anyone with an E70 3.0 report on the GWVR number listed in the sticker on the door jamb? I am wondering if equipment options affect this number.

Thanks

Wyman

The link I provided earlier seems to show more details ...
http://www.forbesautos.com/research/...s/2007/bmw/x5/

GVWR: 5,963 lbs

under PowerTrain for the 3.0 and

GVWR: 6,173 lbs for the 4.8

I got it from the same website...all I did was click on the specs tab and it breaks down the GVWR between curb weight and payload...I don't know how they came to that number for the 3.0si...unless I'm wrong about what GVWR stands for.

ok...figured it out.......looking at the owner's manual......the 5963lbs. is the GVWR if you don't have the 3rd row seat option...with the option, the GVWR is 6327lbs (page 244).

Glad I opted for the 3rd row....the sticker on my door confirms GVWR is 6327 and my CPA has confirmed that this vehicle is eligible.