Small Business Year End Tax Planning

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Example 2: Used Heavy Vehicle Your business uses the calendar year for tax purposes.

You buy a used $40,000 Cadillac Escalade and use it 100% for business between now and December 31. But you can generally write off another $3,000 under the normal depreciation rules.

Example 1: New Heavy Vehicle Your business uses the calendar year for tax purposes.

You buy a new $65,000 Cadillac Escalade and use it 100% for business between now and December 31.

(Used assets don’t qualify.) This break is available for the cost of new computer systems, purchased software, machinery and equipment, and office furniture.

Additionally, 50% bonus depreciation can be claimed for qualified improvement property, which means any qualified improvement to the interior portion of a nonresidential building if the improvement is placed in service after the date the building was first placed in service.

On your 2016 business tax return or form, you can elect to write off ,000 under Sec. That’s equal to 20% of the remaining cost of ,000 (,000 – ,000).

Your first-year depreciation deductions add up to ,000 (,000 ,000). This amount will be adjusted for inflation in future years.

But these vehicles can be useful if you need to haul people, equipment and other things around as part of your day-to-day business operations. Under the Section 179 election, you can elect to immediately write off up to ,000 of the cost of a new or used heavy SUV that’s: 1) placed in service by the end of your business tax year that begins in 2016, and 2) used over 50% for business during that year.

If the vehicle is new, 50% first-year bonus depreciation allows you to write off half of the remaining business-use portion of the cost of a heavy SUV, pickup or van that’s: 1) placed in service in calendar year 2016, and 2) used over 50% for business during the year.

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