12-30-2016, 09:41 AM | #45 |
Enlisted Member
100
Rep 42
Posts |
Section 179 is different from the bonus depreciation incentive. They get added together. The "bonus depreciation" is 50% and only applies to new vehicles. The section 179 gets taken BEFORE the bonus depreciation and is up to $25,000 and applies to any vehicle "new to you." The way I remember reading it, the last year of the bonus depreciation is 2017 and then it will be phased down slowly in future years.
The X5M is over 6,000lbs because they use GROSS weight which is different than CURB weight. I'm sure BMW strategically made their cars heavy enough to qualify... |
Appreciate
0
|
12-31-2016, 08:47 PM | #46 |
Lieutenant Colonel
822
Rep 1,779
Posts |
|
Appreciate
1
t1blackout100.00 |
01-02-2017, 02:22 AM | #47 |
Enlisted Member
25
Rep 44
Posts |
You will get to deduct it all, just not 100% in the first year. Our cargo areas do not fit the IRS definition because it is not a 6' or greater bed and there is a passenger area behind the front seats.
First year you get to deduct ($25,000) + (50% of the cost of the vehicle less $25,000) + (first year standard MACRS depreciation which should be an additional 10% after the above deductions due to late year purchase). Just for fun, lets say that you paid $115,000 for a vehicle. You'd get to deduct: $25,000 then 50% of $90,000 (115,000 less 25,000) or $45,000, then 10% of $45,000 ($4,500) In total, first year deduction is $74,500. On your W-2, your accountant will likely need to show some adjustment to your income due to de minimus personal use of the vehicle. All in all, buying a qualified vehicle isn't a bad deal. If your effective state and federal tax rate is about 50%, then it's like saving $37,000+ off the cost of the above vehicle due to the first year deductions alone. With all that said, I am not an accountant. I do think I have a pretty good idea of how it works and that you'll find the above is exactly how it works. |
Appreciate
4
|
01-02-2017, 02:26 AM | #48 | |
Enlisted Member
25
Rep 44
Posts |
Quote:
|
|
Appreciate
1
t1blackout100.00 |
01-02-2017, 05:31 AM | #49 |
Lieutenant Colonel
822
Rep 1,779
Posts |
The X5 does NOT qualify for full depreciation. You can do $25k under 175 (the SUV cap) AND the bonus 50%.
|
Appreciate
1
ThugzZ BunnY681.50 |
01-02-2017, 11:40 AM | #50 | |
Enlisted Member
100
Rep 42
Posts |
Quote:
Last night I was misreading some stuff about the full depreciation and thought that I had totally dropped the ball on understanding this properly. I think we should be good to go. |
|
Appreciate
0
|
01-02-2017, 03:57 PM | #51 | |
Lieutenant Colonel
822
Rep 1,779
Posts |
Quote:
Of course I'd much rather have the vehicle, so... |
|
Appreciate
1
t1blackout100.00 |
01-03-2017, 01:56 PM | #52 | |
Second Lieutenant
73
Rep 216
Posts |
Quote:
Based on my understanding, the math you presented above is correct. BUT, one thing everyone considering the Sect 179 and/or Bonus Depreciation needs to understand is that while these tax codes do provide a substantial tax savings in the year in which you take the depreciation, you WILL eventually have to pay taxes on the income you offset through depreciation. When you sell the vehicles (sell outright or trade in), you will have depreciation recapture and every dollar that you depreciated on the vehicles will become taxable in that tax year. It's my understanding that the only way to prevent this is to buy another vehicle... and the way the math works, it generally has to be one that is more expensive. This allows you to "kick the can down the road" and continue to defer your tax liability. I'm in commercial real estate, and we get the benefit of very favorable depreciation on our assets, and it helps to keep the current income tax bill low. But, if/when we sell a property, not only are we liable for capital gains from the sale, but also for the depreciation recapture. Same concept with the Sect 179 vehicles. Don't get me wrong, the Sect 179 is still very advantageous and I've done it twice now. But anyone considering using it shouldn't assume that it's as simple as spending the money to pay taxes OR buy a car, because you'll eventually have to pay the taxes! Disclaimer... I am not an accountant, so please don't rely on any of my commentary as sound financial/tax advice! Just sharing based on my understanding and experience with this. |
|
Appreciate
0
|
01-03-2017, 03:29 PM | #54 |
Major
1358
Rep 1,188
Posts
Drives: 2023 BMW M2
Join Date: Feb 2009
Location: Manhasset, NY
iTrader: (3)
Garage List 2018 BMW i3s REX [10.00]
2021 Audi SQ5 [0.00] 2020 BMW M2 CS [10.00] 2018 Audi SQ5 [0.00] 2020 BMW X3M Compet ... [10.00] 1999 BMW M3 [10.00] |
Congrats again! Gorgeous fleet of "company cars" you guys have! Super awesome. Sorry to hijack this thread but can this be done on a lease or finance also or must the vehicle be purchased outright?
__________________
2024 Acura Integra Type S White/Red
2021 Audi SQ5 Black/Red(wife's car) Instagram: Bklyngarage Follow me! |
Appreciate
0
|
01-03-2017, 03:59 PM | #55 |
Brigadier General
992
Rep 3,001
Posts |
Congrats fellas! What's the name of the IT company & what specialization(s)? I run a 3D printing design & 3D printers company here in LA. My backgrounds are in software engineering, product design, accounting, & econ. Cheers, my fellow entrepreneurs!
__________________
re
|
Appreciate
0
|
01-03-2017, 04:01 PM | #56 |
In The Rain
8162
Rep 6,253
Posts
Drives: '24 GT4RS, '24 Macan GTS
Join Date: Mar 2015
Location: SoCal
|
Neat
__________________
'24 Porsche Cayman GT4RS Arctic Grey "Alice"
'24 Porsche Macan GTS Dolomite Silver "Gina" |
Appreciate
0
|
01-03-2017, 04:38 PM | #58 |
Lieutenant Colonel
822
Rep 1,779
Posts |
Section 179 only applies to purchased (financed) vehicles. But you can of course write off lease payments too.
|
Appreciate
1
BrooklynG871357.50 |
01-03-2017, 05:17 PM | #61 |
First Lieutenant
172
Rep 378
Posts |
What's the details on the "tax incentives".
U.K. Resident. And tax incentives on rather expensive and gas gusling beautiful machines are non existant.... |
Appreciate
0
|
01-03-2017, 05:56 PM | #62 | ||
BMW Fanatic
374
Rep 1,413
Posts
Drives: 2020 X3 M
Join Date: Jun 2014
Location: Austin, TX
|
Quote:
__________________
SteveSpy
Current Ride: 2020 X3 M |
||
Appreciate
1
jlnwallis35.50 |
01-03-2017, 05:58 PM | #64 |
Private First Class
94
Rep 143
Posts |
This has got to be the best post EVER!!! Congrats to the OP. Well done in earning your success with your team.
Regarding the need to pay taxes eventually based on the depreciation, I suspect you'll find a way to do this again!!! ?? |
Appreciate
1
t1blackout100.00 |
01-03-2017, 06:49 PM | #65 |
BVARIAN
642
Rep 570
Posts |
bunch of fuckin' ballers.
I love this.
__________________
1999 330ci / 2003 330i / 2008 328i coupe / 2011 328i Touring M-Sport / 2016 M235xi / 2019 440xi GC unicorn / current: 2022 M240xi (the "Purple Porsche Eater")
|
Appreciate
3
|
01-03-2017, 07:09 PM | #66 |
NOOB
1601
Rep 1,356
Posts |
Pretty cool but why not 4 different high end suv to keep things fresh. Swap cars with your partners every week or two.
X5M, range rover sport, cayenne turbo and a gle63 all in the same color to maintain cohesion at the company parking lot.
__________________
@BMWclassicdivision
|
Appreciate
0
|
Post Reply |
Bookmarks |
Tags |
2017, 4 x5m's, govsmart, x5m |
|
|