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Old 01-25-2003, 05:05 PM   #1
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Tax deduction for big cars ?

Just a question for info.

Here on the news ( dutch television ) was a item about big gasconsuming cars ( svp`s ) like the hummer. The newsreader was telling that if you buy such a big car, you get a tax deduction. Is this true ?

Read you,...
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Old 01-25-2003, 05:09 PM   #2
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yes, there is a loop hole.

I know people who buy huge SUVs, Lincoln Navigator for tax reasons.
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Old 01-25-2003, 05:14 PM   #3
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i always admire the wealthy middle to upper classes suburbanites who feel the need to have such a rediculous vehicle. if you live in the country, thats one thing. but to drive that when you face little to no environmental hazards is rediculous.

thanks george for looking out for the rich!
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Old 01-25-2003, 05:24 PM   #4
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here is an article

Tax break fuels SUV purchases

By Jeff Plungis

The Detroit News

WASHINGTON Karl Wizinsky wasn't thinking about buying a new vehicle, and certainly not a big SUV.
So why is there a brand-new $47,000 Ford Excursion sitting in his driveway? He was able to write off $32,000 of the purchase price as a business expense.
"We really did it because it was a pretty hefty deduction," said Wizinsky, a health-care consultant in Novi, Mich.
While the tax code allows big business-expense write-offs for SUVs, prospective buyers of fuel-efficient hybrid cars qualify for a tax credit of only a few thousand dollars.
The law seems counter to national goals of improving vehicle fuel efficiency to reduce U.S. dependence on foreign oil and cut greenhouse gasses. But accountants and auto dealers are touting it. Small-business owners such as Wizinsky are advised that buying a gas-guzzler is a way to cut end-of-the-year tax bills.
"We recognized it immediately and started informing people about how to use it," said James Jenkins, an accountant in Southfield, Mich. "It's just fabulous. My clients have been drooling."
Jenkins said five clients have used the loophole and five more are considering it. He said he also test-drove several SUVs, thinking the deal might be too good to pass up.
"It makes you think very hard about it," Jenkins said. "But it was a 30 percent larger vehicle than I wanted."
Here's how it works: Suppose a business owner wants to buy a $45,000 luxury SUV for use in his business. He or she could write off $24,000 of the cost under section 179 of the tax code as accelerated depreciation.
Then the buyer could write off additional depreciation of the remaining $21,000 under a five-year schedule 20 percent, or $4,200, in the first year. That's a total $28,200 tax write-off. The balance of the vehicle could be written off over the next five years.
A more expensive large vehicle, such as a Mercedes E-class SUV, a Range Rover or a BMW X5, would qualify for an even greater tax break.
The break for trucks got bigger this year under a schedule Congress adopted in 1996. That year, businesses could claim $17,500 in accelerated depreciation on equipment. That lump sum increased to $20,000 last year. It went up to $24,000 this year. Next year and thereafter the deduction will be $25,000.
The 1996 schedule was part of congressional efforts to change tax laws to encourage business investment. The loophole was aimed at farmers, so their working pickup trucks would not be treated like luxury cars, for which the code is not as generous, tax experts say.
Long-standing limits on deductions prevent taxpayers from subsidizing luxury-car purchases, but the limits do not apply to 38 light trucks that weigh 6,000 pounds or more, including the Cadillac Escalade, Dodge Durango, Excursion and Lincoln Navigator.
For example, a business owner wanting to buy a Lincoln Town Car would have to live with a $7,660 deduction, one-fourth what he might save by buying a Lincoln Navigator. It would take more than 15 years to recoup the entire cost of the car.
There is no indication that federal officials want to close the loophole. A proposal to extend bigger tax breaks to environmentally friendly vehicles is stalled in Congress, and President Bush plans even higher depreciation tax breaks as part of the next round of tax cuts.
The government hasn't calculated the total cost of the tax break, but Taxpayers for Common Sense, a nonpartisan Washington, D.C., watchdog group, says it could cost taxpayers $840 million to $987 million for every 100,000 vehicles businesses buy, much higher than several other tax breaks:
Credit aimed at making it easier for small businesses to comply with the Americans with Disabilities Act costs $525 million for every 100,000 uses.
A tax credit to reimburse teachers for classroom supplies annually costs the treasury $250 million for every 100,000 uses.
A provision allowing taxpayers to put up to $3,000 of tax-free earnings a year in private retirement accounts costs about $90 million for every 100,000 taxpayers.
Aileen Roder, program director for Taxpayers for Common Sense, questioned whether there is a national need to subsidize sales of the largest light trucks, given that Americans are buying SUVs in record numbers.
"This is one of the most lucrative breaks in the tax code," Roder said. "We're making it a fiscal no-brainer for businesses to buy giant SUVs."
In 1996, Congress estimated the five-year cost of the tax break for all business equipment to be $1.6 billion. But luxury SUVs had barely cracked the market at that time. IRS spokesman Bruce Friedland said the agency does not keep data on how much the tax break has cost.
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Old 01-25-2003, 05:30 PM   #5
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did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!
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Old 01-25-2003, 05:38 PM   #6
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Quote:
Originally posted by Cow of the Seas
did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!
It is a strange way to plan for the future i guess.

Here in the Netherlands we did have a refund if you buy a car that is low on fuel consumption. Not anymore because it was a succes and it was to costly for the goverment
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Old 01-25-2003, 06:06 PM   #7
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hey rono, but still, it was admirable of your country to at least to that for a time. it still gets the word out that the country is REALLY endorsing "better" cars.

im looking forward to hearing a defence on this.
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Old 01-25-2003, 06:52 PM   #8
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Hmmmm. The way I read the Tax Code, the deduction is based on the cost of the vehicle - not the fact that it is an SUV. So it appears that the argument is not against the deduction, but for more social engineering through the tax code with penalty for SUVs (or vehicles with poor fuel economy, or exceeding a certain gross weight) - which I am not necessarily opposed to.
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Old 01-25-2003, 10:45 PM   #9
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Quote:
Originally posted by Cow of the Seas
did i mention that because they use more gas, it increases our dependancy on imported oil and harms the environment further at the same time? thats great thinking!
indeed. i'm just a tad bit pissed to know that while i only get $2,000 on the hybrid i was wanting, the assfuck parked next to me in his hummer is getting almost 20 times as much back!

at least i'll make up for it in gas consumption, seeing as my gas mileage would be about 20 times better.
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Old 01-26-2003, 01:22 AM   #10
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ya, thats actually quite true khanada.
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Old 01-26-2003, 02:50 AM   #11
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yeah, let's depend more on oil AND increase CO2 emissions!
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Old 01-26-2003, 06:24 AM   #12
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Quote:
Originally posted by Rono


It is a strange way to plan for the future i guess.

Here in the Netherlands we did have a refund if you buy a car that is low on fuel consumption. Not anymore because it was a succes and it was to costly for the goverment
And the cars here (Netherlands, Europe) are already so much more fuel efficient than in other regions. In Europe the price of fuel is quite high. 1 Litre (which is about 1/3 gallon, IIRC) of regular fuel costs about 1.10 euro here (1.17 dollars with today's exchange rates). My car is a diesel one which is 80 eurocents a litre. Most of the price of fuel is taxation. It does, however, force the car manufacturers to build fuel-efficient cars. A normal vehicle will have a consumption of 1 litre of fuel for every 12-15 kilometres (8-10 miles), while a regular diesel will consume 1 litre for every 18-20 kilometres (12-14 miles).
Still, it was a bad idea to scrap that refund.

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Old 01-26-2003, 09:14 AM   #13
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Don't your larger cars have catalytic converters or something?
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Old 01-26-2003, 10:13 AM   #14
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Bush's new ecomonic stimulus package would increase the initial Section 179 dedcution to $45,000.00 from the current &25,000.00.

In defense of the original provision, it was created to assist large, expensive purchase of agricultural equipment like tractors, combines, ect. I live in a rural area and a new combine can run from $150,000 to $250,000 and that tax write off really helps farmers replace outdated equipment or constrtuction companies buy new bulldozers ect.

The problem was accountants found the loophole and the authors didn't exempt passanger vehicles. By adding this exemption into any new tax code would cut off this loophole. My accountant has recommended my husband buy a new truck next year to take advantage of this deduction.
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Old 01-26-2003, 01:00 PM   #15
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Quote:
Originally posted by Angela Harlem
Don't your larger cars have catalytic converters or something?
Yes, but all the cars have them here (AFAIK).

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