NFIB

Drive a BIG Deduction
03/ 28/ 2002

by Milton Zall

Large sport-utility vehicles and minivans don't need to be depreciated if bought for business use, meaning you can deduct up to $20,000 in the year the SUV or minivan is bought. The remainder of the cost can be depreciated.

Ordinarily, an automobile purchased for business use must be depreciated over a considerable period of time. That's because any property you acquire for use in your business that is expected to last more than one year cannot be deducted as a business expense in the year you acquire it. Instead, the IRS says you must spread the cost over more than one tax year and deduct part of it each year. This method of deducting the cost of business property is called depreciation.

But sport utility vehicles and minivans that are rated at more than 6,000 pounds of gross vehicle weight (which includes the weight of cargo the vehicle can carry, not simply the unloaded weight) are treated differently and can be expensed. These heavyweights also are exempted from the luxury-car tax.

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This article originally appeared in the March/April 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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