[StBernard] Business Deductions for Heavy SUV's

[Westley Annis]

There has been a lot of discussion about the new tax rules relating to
Hurricane Katrina.  For those of you in business let's not forget there
are other deductions that you will want to alert your CPA when having your
taxes prepared.  There are new vehicles purchased as a result of the storm
that will save you thousands in tax dollars.

As you have probably heard, businesses can claim substantial deductions
for a heavy (over 6,000 pounds gross vehicle weight) SUVs and other
vehicles used in the business.

For heavy SUVs, the business can deduct up to $25,000 of the SUV's cost in
the year it is purchased. Also, the rules that limit the amount of annual
depreciation allowed on passenger automobiles do not apply to heavy SUVs.
This means the remaining cost of the heavy SUV can be written off over
five years.

All this can add up to a substantial first-year deduction. For example,
the maximum first-year depreciation deduction for a $45,000 heavy SUV
placed in service during 2005 and used 100% for business will generally be
$29,000 [$25,000 expense deduction + $4,000 MACRS deduction]. The maximum
first-year depreciation deduction for a $45,000 passenger auto placed in
service during 2005 and used 100% for business will only be about $3,000.

A heavy SUV is a passenger vehicle with an enclosed body that's built on a
truck chassis that has a gross vehicle weight rating-the manufacturer's
maximum weight rating when loaded to capacity-above 6,000 and less than
14,001 pounds. However, a vehicle that otherwise meets this definition is
not classified as an SUV if:

.         It is equipped with a cargo area of at least six feet in
interior length. The cargo area cannot be readily accessible directly from
the passenger compartment, but it can be either open or enclosed by a cab.
Many pickups with full-size cargo beds will qualify for this exception,
but "quad cabs" and "extended cabs" with shorter cargo beds may not
qualify. So when you go to the dealership, be sure to pack a tape measure.

.         It can seat more than nine passengers behind the driver's seat,
such as hotel shuttle vans.

.         It has an integral enclosure that fully encloses the driver's
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, such as delivery vans.

For these heavy non-SUVs, the full expensing deduction ($105,000 for 2005)
is available. This means that businesses will often be able to write off
the full cost of the vehicle in the year it is purchased.

As you can see, the deductions for purchasing a heavy SUV (or nonSUV) for
use in your business can be substantial. Attached is a list of vehicles
(SUVs and non-SUVs) qualifying for larger deductions. If we can help in
any way, please do not hesitate to call.

Sincerely,

Dan Johnson, CPA
2895 Hwy 190, Ste 235
Mandeville, LA  70471
985-727-6723

Coming back soon: 1019 W Judge Perez Dr. in Chalmette
504-276-8581


Vehicles with GVWRs above 6,000 Pounds[1]

BMW

X5 4.8is SUV



Cadillac

Escalade SUV

Escalade pickup



Chevrolet

Astro Passenger Van AWD (2005)[2]

Avalanche pickup

Express Van (both cargo and passenger models)

Silverado pickup

Suburban SUV

Tahoe SUV

Trailblazer SUV extended models only



Dodge

Dakota Club Cab 4 door

Dakota Quad Cab 4 door

Durango SUV

Ram pickup

Sprinter van



Ford

Econoline E150 and E350

Excursion SUV

Expedition SUV

F150 pickup

F250 pickup

F350 pickup



GMC

Envoy SUV Denali

Safari Passenger Van AWD (2005)2

Savana van (both cargo and passenger models)

Sierra pickup

Yukon SUV



Honda

Ridgeline pickup



Hummer

H1

H2
 Infinity

QX56 SUV



Isuzu

Ascender SUV



Land Rover

LR3 SUV

Range Rover SUV



Lexus

GX470

LX470 SUV



Lincoln

Aviator SUV (2005)2

Navigator SUV



Mercedes

G500 SUV (2005)2

G55 AMG SUV (2005)2

ML350 SUV

ML500 SUV



Nissan

Armada SUV

Titan pickup



Porsche

Cayenne SUV



Saab

9-7x SUV



Toyota

4Runner Limited V8 4WD SUV

4Runner Sport V8 4WD SUV

4Runner SR5 V8 4WD SUV

Land Cruiser SUV

Sequoia SUV

Tundra Access Cab

Tundra Double Cab



Volkswagen

Touareg SUV




Sources: www.intellichoice.com and www.edmunds.com.



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[1]    All are 2006 models unless otherwise indicated. This list is only
as accurate as the information available on the date of publication from
the above source. Be sure to verify GVWRs before making buying decisions.
The GVWR number can usually be found on an embossed label attached to the
inside edge of the driver's side door.

[2]    GVWR not yet posted for 2006 model, but it will probably be above
6,000 pounds based on GVWR for 2005 model.