100% Bonus Depreciation for SUVs for Your Business

[@wendellotanael5201]

This is what ive been looking for

[@JasonDKnott]

Glad it was helpful! Keep in mind, the bonus depreciation percentage is starting to decrease. The 100% write-off for eligible property expired on December 31, 2022. Bonus depreciation write-off for 2023 was 80% of eligible property, and it continues to drop by 20% per year until 2027 when it is phased out completely!

[@wendellotanael5201]

Hi Jayson, thank you very much for that information. If you would I’d like to ask a quick question so let’s say I buy a vehicle December 2024 and put it into service that same month and let’s say it’s a Toyota forerunner worth $60,000. And I use it hundred percent for business in December 2024. Does this mean I can take the section 179 deduction which I believe is around 30,500 and on top of that the bonus depreciation of 60% of thousand dollars at the same time?

[@yo1661y]

What if you purchased the vehicle the last week of the year and use it only for work?

[@JasonDKnott]

If you take bonus depreciation on the vehicle, and then business use falls below 50% in a subsequent year, you have to calculate depreciation recapture as income kzbin.info/www/bejne/iYXcZKV9gdWWi6M

[@tylerdiedrich1947]

Jason what if I buy a 6000 pound truck use it for 1 year and sell it the next year ? purchase price $90,000 sell next year for $50,000 do they recapture the 50k next tax year?

[@sunilggandhi]

@@tylerdiedrich1947 Did u get reply to your question?

[@robwin0072]

If I take max Sec 179 deduction and Bonus deduction the first year auto is places in service; can I take depreciation each subsequent year on the same vehicle?

[@samkeino6810]

Jason, enjoyed your video. Have you considered updating this for 2023 (80%) first year bonus depreciation? Also, you note that the vehicle must be in the company’s name. However, I thought if you had a LLC that was a sole proprietorship, ownership name would not matter.

[@LordRocco777]

This should have so many more views. So useful thank you

[@JasonDKnott]

Glad it was helpful!

[@Team8LA]

Do I get to deduct the gasoline expenses if I use standard millage?

[@db3229]

What if you sell the car in year 2 or 3? Or go w2?

[@salpremiers]

This is such a great video!!! Thank you

[@JasonDKnott]

Glad it was helpful!

[@kasiwilliams5927]

Great explanation Thank You

[@christinetagaste2244]

Hello Jason, I have a question. Since my business was in its first year and had no credit, I purchased a vehicle under my personal name and leased it to my S Corp. Is this acceptable and how do you if at all deduct this as an expense? Thank you for all of your information that you share.

[@jasonk305]

Thx for the info as usual! Good stuff

[@JasonDKnott]

Glad it was helpful. Thanks for the support!

[@jcon31]

Jason, Quick question: Let’s assume that I buy a new vehicle (>6,000lbs gvwr) for my S Corp in mid December, 2022. I ensure that it is registered to my business and I ONLY drive it for business purposes for the final two weeks of the year. I meticulously document those two week’s worth of business driving. This should lead to a verifiable proof that my business vehicle was driven 100% for business, no? According to the tax law this should allow for 100% bonus depreciation of the cost of the vehicle. I understand that future expenses like fuel, maintenance, etc would ONLY be deductible to the percentage I drive this vehicle for business. I further understand that the I would be liable for a 0 basis if I sold the vehicle within the first five years of ownership. Does this sound like an accurate understanding of the law? Thank you so much.

[@tlee2005]

Can you add all the costs such as gas,insurance, and repairs on top of the bonus depreciation?

[@JasonBay-RealEstateInvesting]

I think people also get confused. I've heard the argument "Why pay $80K in taxes? just buy an $80K vehicle instead". But the deduction reduces your taxable income by the deduction amount not your total taxes by the deduction amount. Thus the vehicle is NOT FREE.

[@JasonDKnott]

Exactly. You are still spending the cash. Don't spend the cash unnecessarily to avoid taxes, or else you might go broke!

[@marketbuy]

Help. I dont understand how you got $2240 depreciation on the Lexus GX460. Since it’s a 5 yr SL depreciation, I’m scratching my head around it. Wouldn’t it be $22400/5 yrs?

[@galibhossain6410]

Hi Jason, thank you for you thorough details on all your videos. If I bought a luxury vehicle over 6000 gvwr with the prerequisites met, does the vehicle get capped for being a luxury vehicle or can I still claim bonus depreciation on it since it's over 6000 pounds? Thank you in advance for your response.

[@davidbarthel1090]

This video has been useful. Thank you! For those who purchase a >6,000 lb. SUV and elect not to take bonus depreciation, there is a Section 179 deduction limit of $26,200 for 2021. My question is: does this $26,200 need to be prorated by the business use percentage or can the $26,200 deduction be taken in full (assuming greater than 50% business use)?

[@Isaevrthingmore]

Jason, thank you for the information. I'm confuse about having to have the car under the business's name to take de deduction. Could you share the IRS pub on that topic? So i can read more about it. Thanks

[@bartekwshwsh6039]

Hi, what about luxury car deductions? S-Corp. Car less than 6000 lbs. car price 40k$. 80% business use. Can I deduct 32000 $ in 2 years? First year limit 18200$ second year 16400$ ???

[@purvigandhi7534]

Can we buy a used vehicle and get bonus depreciation if other conditions are met?

[@JasonDKnott]

Yes! Under Section 168(k), when they use the terms "new" property, what they really mean is it is new to the taxpayer, so this is the first time the taxpayer used the property. The property can be either brand new or used.

[@kylebak1]

Can you go further into the second one only being $2240? I thought the IRS guideline was a S/L depreciating term over 5 years equaling 2x $2240. Any help is appreciated.

[@JasonDKnott]

It is called the half-year convention, which the IRS requires you to use under these circumstances. When a business places property into service in the first year, it is presumed to be depreciated as if it was placed into service on July 1, regardless of when it was actually bought. So a year of S/L depreciation is cut in half for the first year.

[@yourRealtorJ]

To use this tax reduction, you have to pay full cash? With loan, you can claim over the downpayment only? Not sure in this part.

[@JasonDKnott]

The cost basis for depreciation is generally the purchase price, whether you paid for the vehicle in cash in full, or financed a portion of the purchase

[@kmarshie]

This was a great explanation.

[@JasonDKnott]

Glad it was helpful!

[@devgrp9]

Thanks for the presentation. Can you cover when to use Sec 179 vs. Bonus Depreciation (assuming corporate vehicle; >6000 GVWR; 100% Business. Can you show difference in 1120-S Forms for S Corp. Thanks.

[@JasonDKnott]

Yes! We can certainly add a video for this topic.

[@marketbuy]

@@JasonDKnott Was wondering if you had done this new video? I will be buying a new 2023 Nissan Ariya and renting it out on Turo (also using it for my Amazon business). Since the purchase will be in mid to late Dec, can I actually do bonus depreciation for 2022 even though the vehicle will not be listed on Turo until January 2023? The vehicle weighs less than 6000lbs. 🙏

[@sadeb3409]

Thanks that was fye!!

[@FF-xl7yw]

Extremely helpful! Question: for 2022... Does it matter if the vehicle is fully paid in cash OR financed OR leased? for our question, please assume that the car is used over 50% for Business. Thanks in advance.

[@JasonDKnott]

You can use bonus depreciation if you pay for the vehicle in cash or finance the purchase. You cannot use bonus depreciation for leased vehicles. Under the TCJA reform, there is an exception for a vehicle that you lease at the beginning, and then purchase the vehicle during the lease term or at the end of the lease term.

[@FF-xl7yw]

@@JasonDKnott thanks again..Does a GX 460 qualify?

[@ben-gardener]

What is the depreciation or “write off” amount being deducted from? Taxable income or just the total dollar amount you owe?

[@JasonDKnott]

Depreciation expense is a deduction against your taxable income.

[@casneek568]

Purchased a 2020 truck for business but did not use depreciation, only millage. Can I start bonus depreciation, in 2021?

[@JasonDKnott]

Bonus depreciation must be claimed and taken the year the asset is placed in service, meaning when was it first used for the business.

[@loucfp]

Can you detail what occurs once the vehicle is disposed/sold? Will the business owner have to recapture the depreciation taken?

[@JasonDKnott]

Yes! We will add the video topic to our list!

[@thomasgruver3495]

What happens if it’s an employee driving and not an owner?

[@combatdouglas1306]

Karlton said 100%. Another witch was worse. Thanks for the heads up. 50%+ 6000 GVW Use it 100% business only. But have a personal Lambo which verifies no personal use.

[@JasonDKnott]

You can still deduct 100% if it legit is business use. This is why some businesses buy a car on December 30 and only use it for “business” the last two days of the year to get the 100% bonus depreciation. Still have to worry about recapture in the subsequent year….

[@veronicabj]

Thank you for this video. It was extremely helpful. Can you please clarify something else I have been hearing all over social media? I keep seeing posts saying that it is possible to get the 100% bonus depreciation AND also the section 179 deduction for the same vehicle. Is this true? How is that done?

[@JasonDKnott]

No, not on the same dollar amounts. It is possible to take the Section 179 deduction first up to the maximum, and then any remaining basis can be deducted using the bonus depreciation. This usually only occurs with very expensive equipment, not vehicles.

[@veronicabj]

​@@JasonDKnott Thank you for clarifying. So in general, for regular vehicles, is it more beneficial to use the Bonus Depreciation vs Section 179?

[@rodrogers9158]

Well presented. Thank you

[@JasonDKnott]

Glad it was helpful! Thanks for watching

[@matthewkim1758]

What would happen if you bought on December 30, and truly used 100% on the last 2 days? Would this suffice for 100% use in?

[@JasonDKnott]

Yes, that would work. You can justify 100% business use for the depreciation deduction. However, most businesses are trapped when it comes to depreciation recapture. We have a separate video that discuss that issue: kzbin.info/www/bejne/iYXcZKV9gdWWi6M

[@thomasgruver3495]

What happens if Jane uses 40% for business this year and 80% the following year?

[@bmwoodley]

Great info thank you. Is there any issues with a significant change of usage year over year? If you buy a vehicle say end of year, it qualifies and 90% is business use, but the following year it's more 50/50 are there any negative ramifications?

[@davidno88]

This is an interesting point. Bonus depreciation doesn’t distinguish the time of year. If you set up your business in December, purchase an automobile on December 26th of that same tax year, and take trips only for business use, does the IRS stop you from applying bonus depreciation? I say no. File the tax return and get your a refund equal to the purchase price.

[@JasonDKnott]

There is potentially depreciation recapture. Just did a video on this: kzbin.info/www/bejne/iYXcZKV9gdWWi6M

[@bh12485]

This was wonderful! Section 179 will not allow a deduction greater than taxed profit, correct? If a business has $3k in taxable income (assume startup), they purchase a 50% business use vehicle that is a minimum of 6k in gwv for $20k. Based on this max deduction for 179/bonus would be no more than $10k?

[@bigstar111]

Say you take the 100% bonus depreciation this year. What about the upcoming 4 years? Do we simply don't include any description?

[@TheDanielTruong]

If the passenger car is

[@marketbuy]

Is this true? Not sure if Jason like your post as a validation

[@E9Soldier]

Has the Inflation reduction act killed bonus depreciation for small business owners?

[@JasonDKnott]

100% bonus depreciation is still around for small business owners that place property into service before December 31, 2022. Under the TCJA, full bonus depreciation is being phased down by 20% for each year afterwards. For example, if you purchase property in 2023, the bonus depreciation amount is capped at 80% rather than a full 100%. Starting in 2027, bonus depreciation is completely phased out. These specific provisions can be found in IRC Section 168(k)(6)(A)

[@E9Soldier]

@@JasonDKnott Thank you very much. I was worried they killed it. I'm hoping to get my business off the ground and purchase a truck for it this year 2022. If I have to wait until next year 80% isn't bad! I'm enjoying your channel!

[@stevenbaldino887]

what if vehicle (passenger car) is less than 6,000 lbs ? He does NOT address that --- the LEXUS model weighs between 5218 - 6600 lbs

[@edenpagani1243]

It looks like you are booked until the end of the year....🤣

[@karenleiva6705]

I’ve heard of people who put their logo and other business information on the side of the car, with the purpose of stating that they are using the car 100% for business. Is that allowed even though they are driving around for personal reasons?

[@JasonDKnott]

you can certainly add logos to the vehicle to promote the business, but the IRS has made it clear that a business logo by itself does not change personal to business use. The driver still needs to track their personal, commuting, and business use miles.