Audit Issue with the IRS: SUV Built on Car Chassis

Here's a vehicle topic that may intrigue you. 



The IRS examined DJ's 2018 tax return, which is now in appeals.  


The vehicle in question is an SUV that weighs 5,700 pounds curb weight and 6,100 pounds gross vehicle weight.

• If the SUV is classified as a passenger car under the tax code, DJ's tax deduction is limited to $18,000 due to the curb weight of 5,700 pounds. 
• DJ's deduction is $55,000 if the tax code converts the SUV to a truck with a gross weight of 6,100 pounds.

Because his SUV is based on a car chassis, the IRS lawyer processing his appeal tells DJ that he must utilize curb weight. 


DJ is entitled to the $55,000 deduction. However, because the law permits it, the IRS lawyers are mistaken.


The SUV must avoid the luxury vehicle depreciation limits on deductions (or Section 179 expensing) to qualify for bonus depreciation. It does so by the following facts:

1. The SUV's gross vehicle weight rating (GVWR) must be at least 6,001 pounds.
2. According to Department of Transportation (DOT) requirements, the SUV must also be a truck. (Manufacturers classify SUVs as "trucks" or "cars" under DOT standards.) 

An SUV, regardless of chassis, can qualify as a truck under DOT guidelines. 


For more information or questions regarding bonus depreciation or Section 179, Please don't hesitate to contact me.