100% Write-Off for Heavy SUVs Used Entirely for Business

• Posted on May 19, 2011
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The 2010 Tax Relief Act provides a limited-time 100% bonus depreciation allowance for qualified property.  It allows taxpayers that buy a new heavy sports utility vehicle (SUV) and use it entirely for business to write-off the entire purchase price in the placed-in-service year.

Heavy SUVs are vehicles with a gross vehicle weight (GVW) rating of more than 6,000 pounds which are exempt from the luxury auto dollar caps because they fall outside of the definition of a passenger auto.

Under the 2010 Tax Relief Act, the bonus first-year depreciation percentage is 100% for eligible property that is generally:

(1) Placed in service after Sept. 8, 2010 and before Jan. 1, 2012, and

(2) Acquired by the taxpayer after Sept. 8, 2010 and before Jan. 1, 2012.

Thus, a taxpayer that buys and places in service a new heavy SUV after Sept. 8, 2010 and before Jan. 1, 2012, and uses it 100% for business, may write-off its entire cost in the placed-in-service year. There is no specific rule barring this result for heavy SUVs.  As an example, let’s say a taxpayer purchased a heavy SUV in October of 2010 for $50,000 and used the vehicle 100% for business for the rest of 2010.  This taxpayer can write-off the full $50,000 cost of the vehicle on his 2010 return.  If used less than 100% - for example, 70% - then 70% of the cost can be deducted.