Anyone Planning to Section 179 their Lightning this year?

[cvalue13]

Not intending to avoid or replace qualified tax advice here, just generally curious in a colloquial way:

since The Lightning weighs over 6,000lbs, in 2022 it may theoretically be subject to up to a immediate 100% deduction for people who are self-employed or own a business

Anyone have experience with / planning on this for 2022?

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[asudan]

I will, assuming I get mine by the end of the year. I've done this with a bunch of work trucks.

 

[newF150]

Yes, my wife drives the Lightning and she’s self employed. We’ve done this for all her vehicles.

 

[hturnerfamily]

so, for those of us not up-to-date on what 'section 179' means, does this mean you are provisioning the whole purchase price/MSRP to a single deduction/credit for the year's income?
or is this also available in a 'over several years' deduction/credit?

 

[Maquis]

so, for those of us not up-to-date on what 'section 179' means, does this mean you are provisioning the whole purchase price/MSRP to a single deduction/credit for the year's income?
or is this also available in a 'over several years' deduction/credit?

Generally speaking, section 179 allows one to take a deduction in the current year for the total value of an asset that would normally be depreciated over multiple years.

 

[Halbach]

Yes, my wife drives the Lightning and she’s self employed. We’ve done this for all her vehicles.

That is quite the tax reduction.

 

[astricklin]

That is quite the tax reduction.

It would be reducing your taxable income. Depending on your situation, this will reduce different amounts of tax paid.
The rules for the deduction also state that the vehicle must be used for business use over 50% of the time, and you can only deduct the amount proportional to the percent of business use.

 

[Regular150]

If you use the entire thing, could it potentially reduce the Energy Credit deduction available? 179 the entire thing liability goes down to 1,500 say, so we can then only receive 1,500 of the available 7,500 Energy tax credit authorized?

 

[cvalue13]

It would be reducing your taxable income.

right, so assuming sufficient and qualifying taxable income and assuming a 35% tax bracket and assuming 100% business usage, a $79,000 Lightning would reduce taxable income by $79,000 and translate to a roughly $27,000 in tax savings

and you can only deduct the amount proportional to the percent of business use.

and from a proof perspective, it would be wise (necessary?) to have records of the business % usage, in the form of mileage logs, etc.


one thing I’ve never understood and wondered, however, is what happens if you purchase and “put in service” the vehicle on say December 26th of the taxable year, then utilize the vehicle solely for business for the next 5 days… obviously seems sketchy, but no one ever mentions a minimum use threshold, only the % use threshold

so, for those of us not up-to-date on what 'section 179' means, does this mean you are provisioning the whole purchase price/MSRP to a single deduction/credit for the year's income?

https://www.section179.org/section_179_deduction/

 

[swngdncr]

We looked into this since my husband has a business and there will be some business use. Since one of his business trips can be 100 miles, I think we'd hit the 50% threshold business use requirement. However, he will likely retire in the next 3-5 years, at which point it would be converted to 100% personal use. Our tax advisor says we'd need to then recapture the depreciation. Also, the vehicle title would need to be in the business name, which I think would limit our financing options. We currently have a rate lock with EECU at 1.99%.... So, it doesn't seem like a good choice at this juncture.

 

[TaxmanHog]

So many folks forget about recapture.......

 

[Lime Green]

I thought they initiated a cap on the amount of tax reduction you can claim with 179…? Like I want to say $18K.

 

[cvalue13]

We looked into this since my husband has a business and there will be some business use. Since one of his business trips can be 100 miles, I think we'd hit the 50% threshold business use requirement. However, he will likely retire in the next 3-5 years, at which point it would be converted to 100% personal use. Our tax advisor says we'd need to then recapture the depreciation. Also, the vehicle title would need to be in the business name, which I think would limit our financing options. We currently have a rate lock with EECU at 1.99%.... So, it doesn't seem like a good choice at this juncture.

So many folks forget about recapture.......

thanks for these insights. Just the sort of chat I was hoping for.

I assume that the vehicle title aspect applies if/when there is a business used to qualify for the deduction, as opposed to a self-employed?

otherwise, it led me down the rabbit hole to tentatively answering my own previous question:

one thing I’ve never understood and wondered, however, is what happens if you purchase and “put in service” the vehicle on say December 26th of the taxable year, then utilize the vehicle solely for business for the next 5 days… obviously seems sketchy, but no one ever mentions a minimum use threshold, only the % use threshold

tentatively, it seems (I’m not a tax expert) the answer is: the above approach is fine, however, if in the following tax year (or subsequent years) the % business usage drops below the threshold percentage it would trigger a recapture in that following tax year

I thought they initiated a cap on the amount of tax reduction you can claim with 179…? Like I want to say $18K.

I think that might be calendar-year based, but with 2022 still allowing 100% of qualifying equipment? 2023 may be a different story?

 

[bewbie]

Would this need a Commercial Plate for NYS?

Edit: found this on the link above

Other heavy “non-SUV” vehicles and trucks with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify for a full deduction (although some “extended cab” pickups may have beds that are too small to qualify).

 

[ExCivilian]

I assume that the vehicle title aspect applies if/when there is a business used to qualify for the deduction, as opposed to a self-employed?

I think the other issue, at least for people who aren't self-employed, will be that they won't be able to purchase the vehicle in their business' name unless they had the foresight to make the reservation in that entity's name.

I don't know how it would work to buy it in one's name and then convey it to their business.

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