Q. Do used SUVs qualify for the Section 179 deduction?

 A. Yes, but make sure the vehicle meets all other requirements, including

Gross vehicle weight and business use percentage — 50 percent or more.

Also, there are rules concerning how the purchase is made, including

Trade-in allowances, exchanges between relatives, and gifts and inheritances. See IRS Publication 946, How to Depreciate Property.

 Q. What happens if you take a Section 179 deduction during one year, but don’t use the vehicle more than 50 percent for business during the second year?

 A. You have to give back some of the deduction because the assumption was that you would use that equipment for its entire useful life, even though you took the entire depreciation the first year.

 The normal recovery period for a vehicle is five years, but you could have equipment that lasts longer or less than that. If you quit using it for business at least 50 percent of the time, you have to do a recapture and report that amount as income on your tax return.

 Recapture means you have to go back and recalculate the depreciation based on how much the vehicle is now used for work.

(For details on how to do this, see IRS Publication 946, How to

Depreciate Property or call Kingman Winslow, LLC).

 Q. If I bought a truck in 2003 for personal use, but in 2004 I started using it for work only, can I deduct all or some of the purchase price on next year’s taxes?

 A. Yes, but you cannot use a 179 deduction on the vehicle.

You can depreciate the vehicle as office equipment under the normal five-year recovery period or use a standard mileage deduction to offset some of the purchase costs. The standard mileage deduction is 37.5 cents for businesses. This is the way many people account for auto expenses for a mixed-use vehicle. All you need to do is keep a standard travel log to back up your claims.

Q. When should a business owner claim a Section 179 deduction on a vehicle purchase?

 A. If you had a very profitable year that was an anomaly, it might be a good strategy to take the full 179 deduction this year to lower the amount of taxes you pay on the profit. But if next year looks like it will be good, too, then you might want to take the depreciation over several years. But you will have to use equipment depreciation because you can’t carry a 179 deduction over to other years.

 One of the most common questions I am still receiving is whether the

Section 179 expensing election is only available for the purchase of brand new assets or whether things such as used vehicles qualify. The answer is still the same. The asset just has to be new to you. You can claim the deduction for items purchased from anyone other than yourself or an entity controlled by you, such as a closely held corporation.

 As of October 22, 2004, the maximum amount that can be claimed for SUVs weighing between 6,000 and 14,000 pounds is $25,000. The remaining maximum deduction can be used for other kinds of business equipment, including vehicles weighing more than 14,000 pounds.

To be eligible for the Section 179 deduction, the asset must be used at least 50% for business in the first year it is placed in service. The cost eligible for the deduction is the business usage percentage.

 As you can see the definition and application of the Section 179 deduction for business assets are more difficult than one would imagine. As such, make sure to call your tax professionals and have them prepare your return with care.