The law also includes an accelerated Bonus Depreciation provision. For 2009, companies could also write-off an additional 50 percent of new investment expenditures for items subject, under current law, to depreciation over 20 year or less. The remaining value of the investments would be depreciated over the life of the item.
In addition, the depreciation limitation on the amount of certain passenger automobiles (Sec.280F) is increased from $2,690 to $10,690 in the first year.
Here are the general guidelines for using the Section 179
Deduction for vehicle purchases:
What Vehicles Qualify?
Vehicles used in your business qualify - but certain passenger
vehicles have a $25,000 limitation, while other vehicles that by their nature
are not likely to be used more than a minimal amount for personal purposes
qualify for full Section 179 deduction:
1. SUV's and any 4-wheeled vehicle designed or used to carry passengers over public roads with a Gross Vehicle Weight (GVW) of more than 6,000 lbs and not more than 14,000 lbs (see below limits for these)
2. Heavy "non-SUV" vehicles with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify (although some "extended cab" pickups may have beds that are too small to qualify.)
3. Vehicles that can seat nine-plus passengers behind the driver's seat (i.e.: Hotel / Airport shuttle vans, etc.)
4. Vehicles with: (1) a fully-enclosed driver's compartment / cargo area, (2) no seating at all behind the driver's seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
The above can be new or used ("new to you" is the key.) They
can also be leased, financed, or bought outright. The vehicle in question must
also be used for business at least 50% of the time.
Heavy SUV's get a reduced deduction
There is a limit you can deduct for example #1 above - SUV's (as
well as other passenger vehicles not listed above). The limit for the deduction
is $25,000. However, you can take a normal depreciation deduction for the rest.
So if you buy a $50,000 Hummer, you can deduct $25,000, and then take normal
depreciation (20%) on the remaining $25,000.
Examples 2-4 qualify for the normal Section 179 Deduction limits.
NADA Guide to Net Operating Loss (NOL)
The Worker, Homeownership, and Business Assistance Act of 2009
The Worker, Homeownership, and Business Assistance Act of 2009 was signed into law on November 6, 2009. It contains several tax provisions, including a provision that allows businesses with net operating losses (NOLs) for 2008 or 2009 to carry back those losses for up to five years. Dealers may recall that the American Recovery and Reinvestment Act of 2009 ("ARRA" or the "Stimulus Act") also contained a NOL carryback provision. This provision supersedes the ARRA NOL provision.
Carryback of Net Operating Losses
The loss carryback provision allows businesses greater flexibility in writing off current losses against past profits by allowing them to carry back NOLs for up to five years (from the current-law two years) for losses incurred in taxable years beginning or ending in either 2008 or 2009 - but not both. Businesses may offset 50 percent of taxable income in the fifth preceding year and 100 percent of taxable income in the remaining four carryback years. If an election is made to carry back an NOL to the fifth year preceding the loss year, the carryback is limited to 50 percent of taxable income. The remaining balance of the NOL generated in the loss year is carried forward to the fourth year preceding the loss year, and so on until the loss is utilized or expired.
Unlike the provision in ARRA, this provision is not limited to small businesses. There is no gross receipts test. The extended carryback provision is available to all taxpayers other than those specifically excluded.
Note also that dealers that were eligible to carry back 2008 losses under the ARRA, and elected to do so, are permitted to carry back losses from 2009. Dealers must make the election by the extended due date for filing the return for the taxpayer's last taxable year beginning in 2009. The election, once made, is irrevocable.