Can you write off a Bentley Arnage under the 6,000 lb rule?

LOL, yeah, you can have me sit in it...

 

I was under the impression that the tax write-off was originally for small business owners that needed trucks for work, with the loophole encouraging big SUVs for non-farmers and non-contractors etc.

Can you actually write off a luxury car with this loophole? I'd like to see the exact text of the tax law. I mean, if you can write off an Arnage or a Phantom....that's just perverse.

Joe

edit - according to this article (http://www.nola.com/news/t-p/index.ssf?/base/news-0/106750054767860.xml), "sedans" don't qualify for the tax break.

 

I wish! Talk about a red flag. I think it is just SUV's and supposed to be used for work purposes.

 

One aspect of the rule is that the vehicle must have a minimum GVWR of 6000lbs. GVWR is not the actual weight of the car, but apparently is the maximum loaded weight of the vehicle. I just spoke to my accountant yesterday about this. A luxury car like a Bentley might be a big red flag that might prompt IRS auditors to expand the scope of their audit. Not a scenario many would relish! You should speak to your accountant about this issue before purchasing.

 

"Hey Bob, can I borrow the Arnage? I need to move some lumber"

 

Take off the trunk lid, put in a Rhino liner, add gun-rack to rear window, naked lady mudflaps and a bumper sticker reading "Don't mess with Texas" and the IRS will back the fudge off!

 

Ask and you shall receive...

Code Section 280F starts out as follows:
(a) Limitation on amount of depreciation for luxury automobiles
(1) Depreciation
(A) Limitation
The amount of the depreciation deduction for any taxable year for any passenger automobile shall not exceed--
(i) $2,560 for the 1st taxable year in the recovery period,
(ii) $4,100 for the 2nd taxable year in the recovery period,
(iii) $2,450 for the 3rd taxable year in the recovery period, and
(iv) $1,475 for each succeeding taxable year in the recovery period.

In English, this means that depreciation is limited for a luxury automobile.

Section 280F(d)(4), then says:
4) Listed property
(A) In general
Except as provided in subparagraph (B), the term "listed property" means--
(i) any passenger automobile,
(ii) any other property used as a means of transportation,
(iii) any property of a type generally used for purposes of entertainment, recreation, or amusement,
(iv) any computer or peripheral equipment (as defined in section 168(i)(2)(B)),
(v) any cellular telephone (or other similar telecommunications equipment), and
(vi) any other property of a type specified by the Secretary by regulations.

Section 280F(d)(5) next defines a passenger automobile as:
(5) Passenger automobile
(A) In general
Except 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 you have to back into the "Luxury SUV" rule by (1) having a 4-wheeled car that is heavier than 6,000 lbs GVW or (2) a 4-wheeled truck or van with a "Unloaded Gross Vehicle Weight" or GVWR over 6,000 lbs.

I hope this helps, ha!

DrTax

 

Thanks Dale! I appreciate it.

I also really respect you for being able to look at that stuff all day long

Joe

 

DrTax,
Does this mean it is possible?
Im confused by all the terms used, so a laymans rewrite may help me.
Id sure like to get a good write off on the Arnage!

 

It means that Bentleys get minimum depreciation.