Section 179- Gross Vehicle Weight 6000lbs

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Reappraiser104
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Section 179- Gross Vehicle Weight 6000lbs

Post by Reappraiser104 »

I'm looking into purchasing an SUV with a third-row and may use the Section 179 deduction. I know the vehicle needs to be at least 6,000 lbs. I'm looking for the best value and most fuel efficient of this class. However, the most fuel efficient vehicles in the "third-row class" are under that weight. Does anyone know if you can round the 6,000lb? The vehicle I am looking at, Nissan Pathfinder, is 5,986 lbs.

Other cars like the Honda Pilot and Toyota Highlander are under 6,000 for 2 wheel drive but meet 6,000 in 4 wheel drive. For some reason the Pathfinder is listed at the same weight for FWD and AWD, which I don't believe is even possible. I think I would have a pretty convincing argument that the AWD has to weigh more than the FWD. However, if I were audited and they disallowed the deduction for 14lbs it wouldn't be worth purchasing the vehicle.

The vehicles that weigh "enough" (Explorer, Traverse/Acadia/Enclave, etc. )are less fuel efficient and currently cost almost 10k more with similar options.

Thanks for any help.
Robin
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by Robin »

Does this mean that the economic value of the purchase rests solely on the timing of 179 vs. normal depreciation? Isn't 179 just a timing issue?
aude
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by aude »

This is all based upon gross vehicle weight rating, that is, car plus passengers, luggage and fuel. For some cars, the extra weight of AWD comes out of passenger and luggage capacity. That's why the GVWR is the same for both variants in some cases.
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Reappraiser104
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by Reappraiser104 »

Robin wrote:Does this mean that the economic value of the purchase rests solely on the timing of 179 vs. normal depreciation? Isn't 179 just a timing issue?
Robin. For my personal purposes, the economic value is solely on the ability to utilize the 179 and expense the entire depreciation in 2014 (in a year where I have unusually high income). I can't take the deduction without the certain Gross Weight as its required to be 6,000 lbs.
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hand
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by hand »

Have you considered purchasing dealer installed option(s) to increase the vehicle weight?
bnes
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by bnes »

You are aware the rules tightened, making it harder for vanity SUVs to qualify? You've got to slap your business name on the outside, or rip out all the seats. Is this a vanity SUV or a true specalized working truck?
The Wizard
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by The Wizard »

hand wrote:Have you considered purchasing dealer installed option(s) to increase the vehicle weight?
Similar to another post, doing something like this does not increase the GVW; it just subtracts from the allowable payload...
Attempted new signature...
rkhusky
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by rkhusky »

The 2012 Pathfinder was listed at 6K GVWR.
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Kosmo
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by Kosmo »

The Wizard wrote:
hand wrote:Have you considered purchasing dealer installed option(s) to increase the vehicle weight?
Similar to another post, doing something like this does not increase the GVW; it just subtracts from the allowable payload...
Exactly...GVWR is a number that can't be changed no matter how much passenger, luggage, cargo, etc. you put in the vehicle. It's the total maximum rated weight of the vehicle and everything in or on it, excluding trailers.

Do you plan on actually carrying that much weight? Or do you just care about the manufacturer's stated GVWR being 6k or higher? Practically speaking, to carry more weight, you could mod the suspension system and get new tires (assuming the frame can handle it). But that still won't change the GVWR.
bhsince87
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by bhsince87 »

IMO, you should get an opinion from a tax consultant or CPA on this one. That law has gotten murkier in the past few years.

IIRC, depending on how you interpret the law, hitting 6,000 lb GVW can be a BAD thing, since that now limits you to a maximum deduction of $25k, unless some other requirements are met.
Time is what we want most, but what we use worst. William Penn
sscritic
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by sscritic »

Now I have just gotten out of week in drug rehab, and while in rehab I thought about the The John C. Bogle Center for Financial Literacy. Literacy means reading and writing for yourself, not giving two eggs to the one person in the village who knows how to read and write to read and write for you.

The first lesson in understanding taxes is knowing why they can be collected. That comes from the laws of the United States. The laws of the United States are codified. The collection of laws is called the United States Code, or USC for short. The Code is divided into titles, each title covering a different topic. Title 31 is Money and Finance (actually, the titles of the Titles and of the various sections of the Titles have no force in law; only the actual text counts). Title 31 includes the Department of the Treasury (I bonds and the like), the Office of Management and Budget, the Government Accountability Office, and Agency Chief Financial Officers. Title 12 is Banks and Banking (e.g., regulation Z, not strictly in the law, but in the related Code of Federal Regulations).

Title 42 is The Public Heath and Welfare, which contains my beloved Social Security in Chapter 7. Old age benefits are in Subchapter II of Chapter 7 of Title 42.

So where is the tax law? In Title 26.

The next step in achieving financial literacy is to learn how to search. I am a fan of google, but you can use whatever search tool you like. To find section 179, type 26 USC 179 into your favorite search engine.

The next step in achieving financial literacy is reading. Read 26 USC 179.

1) Do you see the number 6,000 in 26 USC 179?

2) Where is the mysterious 6,000?

3) If you can find the mysterious 6,000, do you see less than 6,000; more than 6,000; at least 6,000; or no more than 6,000? (Actually, you won't see any of these, but you will find the equivalent of just one of them.)

4) What does unladen mean?

5) Can you find the IRS definition of a crossover?
sscritic
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by sscritic »

Now lets back away from the law and use some common sense in pursuit of Financial Literacy. I am now going to use some fictional numbers, but you are free to use your own or even find the real ones.

Number of Federal Regulations concerning vehicles: 123,783
Number of Federal Regulations that use weight as a criterion: 769
Number of Federal Regulations that us 6,000 pounds as a criterion: 39

1) When a manufacturer builds a vehicle with a weight of 5,990 pounds, how many of the 39 regulations is the manufacturer going to ignore?
2) How does the manufacturer choose which regulations to ignore?
3) Assuming the manufacturer is not going to ignore any of the regulations, is the manufacturer going to claim that 5,990 is more than 6,000?

I know what my common sense tells me. What does yours tell you?
sscritic
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by sscritic »

In case anyone missed it, the OP started with two incorrect assumptions. One is that he is buying an SUV. What is the other?
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Kosmo
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by Kosmo »

Here is 26 USC 179 Subsection (b) (5):

(5) Limitation on cost taken into account for certain passenger vehicles
(A) In general
The cost of any sport utility vehicle for any taxable year which may be taken into account under this section shall not exceed $25,000.
(B) Sport utility vehicle
For purposes of subparagraph (A)—
(i) In general
The term “sport utility vehicle” means any 4-wheeled vehicle—
(I) which is primarily designed or which can be used to carry passengers over public streets, roads, or highways (except any vehicle operated exclusively on a rail or rails),
(II) which is not subject to section 280F, and
(III) which is rated at not more than 14,000 pounds gross vehicle weight.
(ii) Certain vehicles excluded
Such term does not include any vehicle which—
(I) is designed to have a seating capacity of more than 9 persons behind the driver's seat,
(II) is equipped with a cargo area of at least 6 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, or
(III) has an integral enclosure, fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.


So... the maximum deduction is $25,000 and GWVR must be <= 14,000 lbs. Subsection (B) (ii) also seems to restrict: (I) passenger vans/mini busses/large people moving vehicles; (II) pickup trucks/panel trucks/cargo vehicles where the cargo compartment is separate from the driver compartment; (III) utility vans/delivery trucks/cargo vehicles where you can readily pass from the cargo compartment to the driver compartment.
sscritic wrote:In case anyone missed it, the OP started with two incorrect assumptions. One is that he is buying an SUV. What is the other?
Here's my stab at answering your questions after applying this concept you call "literacy":
Assumption 1: It must be an SUV. By this definition any vehicle subject to the restrictions in (i) [aside: section 280F deals with automobile depreciation] and not specifically disallowed in (ii) is a "SUV". Sedans, coupes, and small pickup trucks would be "SUVs" for these purposes.
Assumption 2: Vehicle must be over 6,000 lbs. It must be no greater than 14,000 lbs GVWR.
sscritic
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by sscritic »

Kosmo wrote: Here's my stab at answering your questions after applying this concept you call "literacy":
Assumption 1: It must be an SUV. By this definition any vehicle subject to the restrictions in (i) [aside: section 280F deals with automobile depreciation] and not specifically disallowed in (ii) is a "SUV". Sedans, coupes, and small pickup trucks would be "SUVs" for these purposes.
Assumption 2: Vehicle must be over 6,000 lbs. It must be no greater than 14,000 lbs GVWR.
I think those are the right answers, but you have me a little confused.

An SUV has to be a vehicle "which is not subject to section 280F" 280F applies to passenger automobiles,
(5) Passenger automobile
(A) In general
Except as provided in subparagraph (B), the term “passenger automobile” means any 4-wheeled vehicle—
(i) which is manufactured primarily for use on public streets, roads, and highways, and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
In the case of a truck or van, clause (ii) shall be applied by substituting “gross vehicle weight” for “unloaded gross vehicle weight”.
So since the vehicle he wants to buy is under 6000 pounds, it is not an SUV, it is a passenger automobile.

P.S. The OP wrote
I know the vehicle needs to be at least 6,000 lbs
The law says it must not be a passenger automobile, which go all the way up to 6000 pounds, so even if he rounded 5990 to 6000, it is still not an SUV.

However, the law seems a little confused on a truck or van. Now I don't think any of the vehicles under consideration are trucks or vans, but can you figure this out?
(A) In general
Except as provided in subparagraph (B), the term “passenger automobile” means any 4-wheeled vehicle—
(i) which is manufactured primarily for use on public streets, roads, and highways, and
(ii) which is rated at 6,000 pounds unloaded gross vehicle weight or less.
In the case of a truck or van, clause (ii) shall be applied by substituting “gross vehicle weight” for “unloaded gross vehicle weight”.
(B) Exception for certain vehicles
The term “passenger automobile” shall not include—
(i) any ambulance, hearse, or combination ambulance-hearse used by the taxpayer directly in a trade or business,
(ii) any vehicle used by the taxpayer directly in the trade or business of transporting persons or property for compensation or hire, and
(iii) under regulations, any truck or van.
It seems as if a truck or van can be a passenger automobile (A) except (B) when the regulations say a truck or a van is a truck or a van.

Note that pub 946 seems pretty clear on the weight issue:
You cannot elect to expense more than $25,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax year. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight.
brentwasham
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Re: Section 179- Gross Vehicle Weight 6000lbs

Post by brentwasham »

I took "(II) is equipped with a cargo area of at least 6 feet in interior length which is an open area or is designed for use as an open area but is enclosed by a cap and is not readily accessible directly from the passenger compartment, " to be a description of pickup trucks and specifically excepting pickup trucks from the $25,000 cost in a single year deduction limitation. I suppose they could not weigh more than 14,000 lbs, too, but structure of this particular section (5) of code doesn't clearly cover weight, it is aimed at the $25,000 per year limitation. So, if my interpretation is correct, you could buy a pickup costing $50,000 and deduct the entire cost that year but maybe it shouldn't weigh more than 14,000 lbs.
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