Did you take advantage of Section 179 expensing deduction on your vehicle.
Do you know the you could lose it?
Do you know how to keep it?
You might wonder: What do we mean by “keep it”?
In tax law, there’s no free lunch. The Section 179 deduction comes with “recapture strings” attached.
When you claim your Section 179 deduction, you make a deal with the government to keep your business use above 50 percent during the “designated” depreciation periods (five years for vehicles).
One Sad Story
In 2018, If you claimed a $53,000 Section 179 deduction on a qualifying pickup truck. In 2020, Your spouse, drives the truck and your business use drops to zero.
You have just violated the 50 percent business-use agreement with the government. Now you have phantom income to report (called “recapture”), and you will be required to pay the price for breaking his tax promise on the Section 179 deal.
You need to consider recapture when doing your tax planning. If you would like my help with this, please don’t hesitate to contact us..
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.