Business owners a question?

[*BN*]

Purchase truck with cash, use section 179.

[BrendellaJet]

Not knowing many facts about your biz...What I did was;
When I purchased my Box trucks (used) I expensed the entire amount and took the write off in one lump sum.
I think last year was it for that though so you’re back to depreciation over time now. This was a Bush stimulate package deal. I purchased 4 vehicles under those guidelines. Helped taxes somewhat.
Very common in a commercial lease is a dollar buy out at the end or one with a very low residual. The lender really does not want it back. 100% business vehicle is a 100% write off.
You can also claim miles but its either/or not both. Miles is near .40 per this year I think.
Consult your CPA.
The section 179 bonus rates promote a timing difference only. In the end you gained nothing, but its all about the timing. In good years, you buy assets to grow the business, use the section 179 deductions to adjust income down.
If the lease does not have the one dollar buyout, it is not capital and is instead termed an operating lease which is not subject to the section 179 deductions. Other requirements for a capital lease include:
lease transfers title to the lessee at time of sale, lease term is 75% or more of the useful life of the lease, & the PV of the minimum lease payments (MLPs) is 90% or more of the FMV of the asset retained by the lessor.
Section 179 deduction limit is 112k for 2007. Same for 08 & 09 but with COLA adjustments.

[BrendellaJet]

Purchase truck with cash, use section 179.
Id leave my cash alone and bank the interest. You'll get a better return with your money in a mutual fund right now compared to the interest you will pay on a lease...:idea:

[OCMerrill]

The section 179 bonus rates promote a timing difference only. In the end you gained nothing, but its all about the timing. In good years, you buy assets to grow the business, use the section 179 deductions to adjust income down.
If the lease does not have the one dollar buyout, it is not capital and is instead termed an operating lease which is not subject to the section 179 deductions. Other requirements for a capital lease include:
lease transfers title to the lessee at time of sale, lease term is 75% or more of the useful life of the lease, & the PV of the minimum lease payments (MLPs) is 90% or more of the FMV of the asset retained by the lessor.
Section 179 deduction limit is 112k for 2007. Same for 08 & 09 but with COLA adjustments.
When was section 179 placed into law? Maybe this is not so new after all?
Have your heard of HBLA in Irvine? I have used them for the past 20 years. I am still a small fish and as they grow even larger I might get thrown back. Might be the year to move on.
Nice explanation by the way. Thanks.