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Automotive Dealerships Advisory - Tax Breaks for Commercial Vehicles Set To Expire - Buy Now Before January 1st

Thursday, December 12, 2013

Tony Argiz

Tony Argiz
CPA*/ABV/CFF, ASA, CVA, CFE
Chairman and CEO
targiz@mbafcpa.com
(305) 373-5500

Ira Silver

Ira Silver
CPA, Principal
isilver@mbafcpa.com
(407) 781-0150

*Licensed to practice in the states of Florida, New York, Colorado, Texas and Pennsylvania

As the year comes to a close, there are many incentives and tax provisions that were built into the stimulus bill and other legislation that specifically relate to automotive dealerships. According to the Automotive News, one in particular has to do with the purchase of new fleet or commercial vehicles, particularly for vehicles of more than 6,000 pounds, such as heavy-duty pickups and SUVs.

For any business considering such purchases, the time to buy is now, before December 31st, when such incentives may be gone for good. For example, for a single vehicle in the price range of 50-100K, right now you may be able to deduct from 70% up to 80% of the cost for 2013. For the same vehicle acquired in 2014, the deduction could drop to as little as 40%. With multiple vehicles, the difference becomes even greater. The percentage deduction in 2013 remains the same, while the deduction for even two heavy duty vehicles that are acquired in 2014 could drop from as little as 40% to as low as 20%. The reduction increases as more vehicles are acquired. So particularly for those considering new fleet purchases, it is advisable to act before December 31st.

In addition, unless Congress takes action, bonus depreciation won't be available after 2013. Furthermore, the Section 179 deduction limit will drop to a $25,000 combined total for all eligible property acquired and placed in service during tax years beginning after 2013-not just for heavy trucks and SUVs.

Congress may elect to extend these incentives. However, auto dealers should be sure to make every effort to let customers know that now may be the last chance to take advantage of these significant tax breaks.

Taxation and filing issues for end of the year decisions can be complex, especially those relating to new equipment purchases. If you would like to benefit from our expertise in these areas or if you have further questions on this Advisory, do not hesitate to contact our Automotive Dealerships Specialists, or call us at 1-800-239-1474.