Question

A taxpayer purchases and places in service s new sport utility vehicle (SUV) that cost $60,000 smf weights more than 6,000 pounds loaded. The SUV has never been used by anyone before the taxpayer. The total cost of all depreciable personal property purchased by the taxpayer during the year was $200,000. Which deductions may the taxpayer claim with respect to this SUV for tax year 2017?

Answer 1

In 2017, a taxpayer with a new $60,000 SUV more than 6,000 pounds could claim a Section 179 deduction and potentially bonus depreciation, with phase-out adjustments based on total depreciable property costs of $200,000.

Step-by-step explanation:

For tax year 2017, a taxpayer who purchased a new SUV for $60,000 that weighs more than 6,000 pounds may claim deductions under Section 179 of the IRS tax code. As it was new and placed in service in 2017, the taxpayer is potentially eligible for an immediate expense deduction up to the given limit for that year, which was $510,000. However, this deduction is subject to a phase-out threshold; as the total cost of all depreciable property was $200,000, the taxpayer must reduce the Section 179 deduction dollar-for-dollar by the amount that exceeds the $2 million threshold. The taxpayer may also be eligible for bonus depreciation if the SUV is used for business purposes more than 50%.