Automobile depreciation

Confused about the weight issue for depreciating a van or truck. Since I didn't have a client with a van or truck close to the 6,000 pound weight, I didn't dig deeper till I got a client who has a van that comes close.

Reading the Publication 946, and found this statement (emphasis added):

"A passenger automobile is any four-wheeled vehicle made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross vehicle weight (6,000 pounds or less of gross vehicle weight for trucks and vans)."

So for vans and trucks in the parentheses section , does the 6,000 pounds of "gross vehicle weight" mean loaded weight? Is that the same as GVWR (gross vehicle weight rating)?

The curb weight of the van is 5,800 with as GVWR of 8,000.

Sec 179 limit of $25,000

1)When dealing with a truck or van look at its GVWR(loaded) which must be over 6000 lb but under 14,000 lb. Can find on label inside edge of drivers side door or put in make model and look up GVWR under specs at http://www.intellichoice.com/.

2)When dealing with a car, look at its GVW(unloaded) to see if over 6000 lbs and its GVWR(loaded) is under 14,000 lb.

Or run a truck like this and thus skirt the whole question. https://www.youtube.com/watch?v=V75seLLD2i8

Nice!

Hello All.

A passenger automobile is defined as UNLOADED GVWR 179 (b) (5). And Weissa talks about truck or van GVWR LOADED.

So what about a SUV that unload has GVWR of 5,500 and loaded GVWR of 6,500. I dont see how a SUV meets the definition under 280 F (5) is a truck or van.
(5) Passenger automobile
(A) In generalExcept as provided in subparagraph (B), the term “passenger automobile” means any 4-wheeled vehicle—
(i) which is manufactured primarily for use on public streets, roads, and highways, and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
In the case of a truck or van, clause (ii) shall be applied by substituting “gross vehicle weight” for “unloaded gross vehicle weight”

So is the SUV 25,000 deduction under 179 the unloaded or loaded weight?

Now with the new tax law I am reading about 100% bonus depreciation and stating that you dont have to consider the 25,000 limit with the bonus deprecation of the SUV. And secondly that the SUV can use the GVWR LOADED. I cannot find any site to the new tax law that would allow the SUV to bonus depreciation based on the GVWR LOADED of 6,500 in my example.

What do you think?

Thanks for your ideas,

Art

Does anybody else remember 2011 when IRS decided that if you had not elected out of 100% bonus depreciation for a vehicle placed in service in 2010 you could not take depreciation after the first year until you reached the end of the car's normal depreciation period? In 2011 they came out with a Rev. Proc. that let you retroactively treat the car as if you had elected 50% bonus.

But for 2018 there is no 50% bonus, it's either 100% or no bonus depreciation at all. Will they be able to do the same thing again or is it wiser to elect out of bonus for 5 year property and settle for the $10,000 maximum?

Hi Tenletters,

Thanks for touching base. But I need help with the issue of whether the loaded or unloaded amount applies to the Gross weight for SUVs for 179 purposes.

And under bonus depreciation is there a different rule and SUVs can use the loaded GVWR.

Thanks!!!

Art

Per Publication 946:
Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,000 limit does not apply to any vehicle:
Designed to seat more than nine passengers behind the driver's seat,
Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible from the passenger compartment, or
That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield

HI Seaside,

Thanks for touching base.

"more than 6,000 pounds gross vehicle weight"

Is that loaded or unloaded?

Thanks,

Art

This article in the Tax Advisor indicates that most SUVs are considered trucks. I assume this is because most are built on a truck chassis?

https://www.thetaxadviser.com/issues/2015/feb/tax-trends-01.html

https://www.mileiq.com/blog/section-179-vehicles-deduction/

Loaded. SUV's fall in with the trucks/vans. See also this PLR:
https://www.bradfordtaxinstitute.com/En ... 520034.pdf

Thank you Seaside!

Kristine Tidgren at Iowa State on Feb 25 2018 wrote and article

Although SUVs purchased after September 27, 2017, remain subject to the $25,000 IRC § 179 limit, they are eligible for 100% bonus depreciation if they are above 6,000 lbs. This is true for both new and used vehicles.

So I still have the question of loaded or unloaded 6,000 GWVR, but now it seems that what cannot be achieved via 179 can be obtained via bonus depreciation. If loaded over 6,000 then I can bypass 179 limite of 25K and bonus 100%? I wish there was a cite for this conclusion.

Here is another good article by Scott Mills Feb 1 2015 for the AICPA tax advisor that says even if a SUV is consider a truck or van , even truck and vans under 14,000 lbs are subject to the 25K limited unless the truck or van meets 3 exceptions.
Trucks and Vans Over 6,000 Pounds

There is no limit on regular and bonus depreciation for trucks and vans that do not qualify as passenger automobiles. As with SUVs, the Sec. 179 expense deduction for trucks and vans rated at more than 6,000 pounds but not more than 14,000 pounds gross vehicle weight (loaded) is $25,000. However, the limit does not apply to trucks and vans in this weight class if the vehicle:

Is designed to have a seating capacity of more than nine persons behind the driver's seat;
Is equipped with a cargo area at least 6 feet in interior length that is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment; or
Has an integral enclosure, fully enclosing the driver compartment and load-carrying device, does not have seating behind the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.

This means that no limits apply to the Sec. 179 expense deduction or bonus depreciation under Sec. 168(k) if one of these exceptions applies, which will allow many taxpayers to deduct the full cost of a vehicle in the year of purchase. Practitioners must be aware of these definitions to ensure that the Sec. 179 deduction limit is not improperly applied.


There is a void in the law. If a vehicle )SUV) weight unloaded under 6,000 lbs it meets the definition of a personal automobile and not a SUV , if that same vehicle is over 6,000 when loaded then it meets the definition of a SUV. The same vehicles can meet the same definitions with different tax results.

I'm not sure what you are saying. If the vehicle is classified as a truck or van/suv by the manufacturer, then you are to look at the loaded GVW. If the loaded GVW is 6000 pounds or less, it falls under the definition of a passenger automobile and is subject to depreciation limits. If the loaded GVW of the truck, van or suv is over 6000 pounds, it is exempt from the auto depreciation limits. You do nothing with the unloaded GVW since it is a truck, van or suv.

HI fellow tax prepares

280F defines an personal automobile on the unloaded weight. So how can you have a vehicle that has an unloaded gross vehicle weight under 6,000 be a SUV that qualifies as a SUV. Well the vehicles loaded GVWR is over 6,000. So it is both a personal automobile and a SUV because its unloaded weight is under 6,000 lbs and its loaded weight is over 6,000lbs.

5) Passenger automobile
(A) In genera lExcept as provided in subparagraph (B), the term “passenger automobile” means any 4-wheeled vehicle—
(i) which is manufactured primarily for use on public streets, roads, and highways, and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or less

You left out "In the case of a truck or van, clause (ii) shall be applied by substituting “gross vehicle weight” for “unloaded gross vehicle weight”," which you quoted before. This means that in the case of a truck or van, the unloaded gross vehicle weight is ignored.

Hi MSchmahl,

Yes I did leave out the part about trucks and vans. But I am talking about SUVs and the SUV never makes it to the same classification for deduction as loaded GVWR truck or van for a deduction of 25K if a vehicle meet the definition of a personal automobile. That definition of a personal automobile is an unloaded weigh less than 6,000 lbs.

So the same vehicle can meet both definitions

unload 6,000 = automobile (limited depreciation)

and

loaded 6,000 lbs SUV eligible for 25K.

What do you think?

Art

A four-wheeled vehicle is either a truck or van, or it is not. If the vehicle is not a truck or van, then the "unloaded gross vehicle weight" language of (ii) applies. If the vehicle is a truck or van, then the "gross vehicle weight" language applies. They cannot simultaneously apply. Most (all?) SUVs are considered trucks for purposes of 280F (Rev. Proc. 2003-75).

But if a particular SUV were not considered a truck or van for purposes of 280F, the gross vehicle weight is irrelevant.

If 280F applies, then the 25,000 Sec. 179 deduction is not available. If 280F does not apply, then the 25,000 Sec. 179 is available. (280F(d)(1) and 179(b)(5)). There is no way for any vehicle to be subject to the depreciation limits of 280F and also be subject to the 25,000 Sec. 179(b)(5) limit.

(5) Limitation on cost taken into account for certain passenger vehicles

(A) In general The cost of any sport utility vehicle for any taxable year which may be taken into account under this section shall not exceed $25,000.
(B) Sport utility vehicle For purposes of subparagraph (A)—
(i) In general The term “sport utility vehicle” means any 4-wheeled vehicle—
(I) which is primarily designed or which can be used to carry passengers over public streets, roads, or highways (except any vehicle operated exclusively on a rail or rails),
(II) which is not subject to section 280F, and
(III) which is rated at not more than 14,000 pounds gross vehicle weight.

[bold in original, italics added]

2003-75 defines a SUV as being built on a truck chassis.

Take a look at a Tesla Model X and tell me that was built on a truck chassis.

For purposes of this revenue procedure, the term “trucks and vans” refers to passenger automobiles that are built on a truck chassis, including minivans and sport utility vehicles (SUVs) that are built on a truck chassis.

Same or similar language appears in annual revenue procedures through 2012 (2012-13). But each contains this language (adjusted for its year):

This revenue procedure applies to employer-provided passenger automobiles first made available to employees for personal use in calendar year 2012.

. Didn't see any later than that.