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Sec 179 expense for 75% use vehicle >6,000 lbs

First, if sec 179 expense limit is $25,000 for a vehicle with GVW over 6,000 lbs, and the vehicle is only 75% business use, would the sec 179 expense limit be $18,750 (75% of $25,000)?

Secondly, when entering sec 179 expense in ProSeries Professional Edition, I do not get any errors if I enter amounts greater than $25,000 in the sec 179 expense field.  I would have expected the program to know the limits and/or apply the 75% limitation if it applies, based on the business use specified in the asset worksheet.

Can anyone address either question?

Thanks for your help.


     What is the total cost of the vehicle?  That will make a difference in the amount the program will allow for the Sec 179 expense, with 75% business use.

    • To be able to deduct the full $25,000 under Sec 179 (with 75% business use), the total cost of the vehicle must be at least $33,333.   If the cost is less than $33,333, the Sec 179 deduction will be less than $25,000.  If the cost is $33,333 or more, the Sec 179 deduction will be $25,000. If the vehicle qualifies, you could also elect to deduct the Special Depreciation Allowance (75% of the difference between the total cost and $25,000 deducted under Sec 179). Edited to add more details.  Allstars, go ahead and sue me!
    • Yes, the cost of the vehicle is $43,196 x 75% is $32,397 maximum amount of depreciation that can ever be taken on the vehicle.  So if I understand correctly, the maximum sec 179 amount doesn't decrease, it stays at $25,000.  The vehicle is used, and not eligible for bonus deprec. In the 2nd part of my question, when I was checking the ProSeries software, I entered $33,000 into the sec 179 deduction field, and it gave me no errors.  This seems like a bug in the program.
    • Part 1 of your question - Yes Part 2 - Does the business use percentage at the top of the vehicle worksheet show exactly 75%?  It worked fine when I tested it, but I had 75% exactly for the business use.  Actually, the program gave me an error if the Sec 179 amount was more than $25,000, if the cost was $33,333 or higher. EDIT:  I just saw the posts about B1 and B2, and yes, that will be a factor that I wasn't thinking of before.

    I just tried entering your truck on the car worksheet and it limited the sec 179 expense to the $18750.  Did you use the worksheet and enter the basis information there?  It then carries over to the F4562 w/the correct number. Edit: I used a $25000 truck for my example.  I'll see if it changes with the different cost.

    • I am using the Car-Truck worksheet, class B1 Truck or van >6,000 lbs (it's a heavy-duty Dodge diesel pickup).  The number I actually used was $32,000 (not $33,000) but ProSeries is allowing the full amount and not limiting it on the Form 4562. What am I missing?
    • A B1 vehicle is not limited to $25,000.
    • QuickFinder says that a heavy vehicle over 6,000 lbs. is subject to $25,000 section 179 expensing limit.  Maybe I don't understand ProSeries definition of a B1 asset, but I don't see any other asset class where a truck over 6,000 lbs. could fit into.
    • You have a choice within ProSeries of Type B1 or B2. A B1 type among other things is over 6,000 lbs and has at least a 6 foot cargo bed. Limit of $25,000 for Section 179 does not apply. If it is a vehicle that should be limited to $25,000 Section 179, select Type B2 and Proseries will limit it. Read the law for Section 179, not just QuickFinder.  
    • Thanks, CMS--another one for my email collection of valuable information.

    How did you specify the vehicle?  The $25,000 limit only applies to certain types of vehicles- primarily passenger vehicles.  ProSeries does apply the appropriate limits depending on the type of asset you specify.

    Edit- In other words, did you specify it as a B1 or B2 type vehicle?

    • Ok, so ProSeries considers a heavy-duty Pickup truck to be a SUV - type B2 vehicle [I personally don't think SUV fits the description of a Dodge RAM 3/4 T. pickup].  But it appears that is the only way the section 179 limits will properly apply. I thought SUV indicated the usual meaning "Sport Utility Vehicle" which I would not attribute to a heavy-duty class of pickup trucks. So my choice is to classify these trucks as SUV's to make sure the Sec 179 limits properly apply or make sure to manually limit the sec 179 amount. Thanks for your help.
    • Where are you seeing this? I see options as follows: A1- Auto under 6,000 lbs A2- Light Truck/van/SUV under 6,000 lbs B1- Truck or van over 6,000 lbs B2- Heavy SUV over 6,000 lbs etc... Where in the B1 description does it say "SUV"? Why do you think it is supposed to be limited to $25,000 for Section 179?    
    • There is no limit for the Sec 179 deduction (except for the 75% limit due to business use) when I use B1.  When using B2, there is a limit of $25,000 for the Sec 179 deduction, when the cost is $33,333 or higher.   If B2 and the cost is less than $33,333, the Sec 179 deduction will be reduced and will be 75% of the cost. Hope this resolves this problem for you!
    • I think my confusion lies with my comparison of my old software classes of assets and ProSeries classes of assets.  And you might be right - I may be placing too much reliance on QuickFinder. After rereading the US Master Tax Guide, it would appear the $25,000 sec 179 expense limit does NOT apply to my heavy duty truck, but the 1040 QuickFinder page 11-1, clearly states the Section 179 expensing limit for Heavy Vehicles with GVWR over 6,000 lbs. is $25,000. That's why I thought I needed to use code B2 to get the program to apply the $25,000 limit, which is incorrect, since this vehicle is not subject to the sec. 179 limit. The troubling part is that my old software made no distinction between SUV's or trucks and vans >6,000 lbs - they were all in the same category.  So I wonder how many times the sec 179 limits were incorrectly applied and I didn't catch it? Thanks for showing me the err of my ways!
    • Remember that Quickfinder was printed before the latest tax law changes by Congress.  Be careful about relying on it this year. Don't know about your old software.  I have my issues with ProSeries, but I don't want to see it bashed inappropriately.   Please mark it solved if it is.  
    • Yes, I knew about the QF changes and got the updates.  But the sec 179 limits in QF have been shown this way for years, so my brain apparently replaced my prior training with the QuickFinder language since I have seen it in print year after year. Not bashing ProSeries, just trying to figure out my dilemma which is now solved. I thank you for your help.

    I am superstitious about using 179 for almost anything because recapture is required too often.

    • I agree, Charlotte, and I use it cautiously.  But the farmers in our area have huge income in the last few years so they are looking for quick write-off's.  I am always quick to point out the draw-back of taking all your deductions in one year and leaving nothing for next year, as well as the potential recapture.  If they still want to go down that road, they know the risk up front.
    • The majority of people keep their equipment for many years and don't have to recapture the Section 179 expense.  That's the case with most of my clients.  Many of my bigger farmers want to use Sec 179 for all equipment.  I also advise it in most cases, because it's always better to have the cash flow now, rather than getting a little bit each year.

    I just tried again--the program allowed the $32397, but when I entered $33000 on the car worksheet, it gave me that nasty little box that says no and won't go away until you correct it or tell the program you don't care what it thinks because you are going to do it your way..

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