...that is 6,000 pounds and qualified to take advantage of business depreciation tax write off, what would you consider purchasing? Very likely a purchase would greatly help in offsetting some income tax liability for this year and additional years upcoming.

I don't necessarily need a diesel or anything for regular dedicated towing equipment currently but I can see the need for in the future possibly...dump trailer or small mini ex/skid steer/tractor but not regularly.

New options?
Used options?...open to gently used options with low mileage.

Also chime in on thoughts about regular heavy vehicle standard 5 year depreciation and the now 80% bonus depreciation. Take the bulk early or spread it out strategy?

Any lenders do better with business financing vs traditional auto loans?

Thanks in advance!
Mike

This is coming from someone who drives a 3/4 ton diesel currently, but if I was in the market I would be looking at the Ford F250 7.3 gas or a GM 6.6 gas.

For occasional towing or even once a week, I don’t think the diesel is worth the extra cost to maintain. I’ve already had to put a $9,873 fuel system in mine, $1,800 to replace DEF module, and $200 oil changes. You can buy a lot of fuel for those prices to make up the difference in MPG.

Except for the super base models, most 4x4 F150's and 1500's now meet the 6000 lb GVW requirement with room to spare, so you no longer have to bump up to a 250 or 2500 to qualify for the bonus. I just bought one a few weeks ago that I'm doing the bonus dep on. Actually got a really good deal on it. Both new and used trucks down here started sitting on the lots, for the first time in years, about 3 months ago and prices finally started bumping down. On the one I got, I probably got it for 12-15% better pricing than what I could have done on the same truck 4-6 months ago when they were being bought the same day that they put them out. 2 yrs old, 21K miles. There are no lender financing specials on anything used, most of the Big 3 are offering pricing discounts and financing incentives on the 2023 new trucks, 1.9% for 36 months and 4.9% for 48 months financing on new. No diff in business vs traditional at a bank or CU.

Note that on Fords, the 2024s can be ordered now, but when I was looking, I was told that delivery would be sometime in spring of 24. Guy that told me said he personally expects Ford to bump that delivery date out even further based on there not being any body or engine changes and them starting 4 months later than normal, taking orders on them. Nothing for certain but just said he has a hunch it will probably happen.

Bonus is 80% through 12/31/23, then it drops to 60% for 2024 and does 20% a year, completely phasing out at the end of 26. Take the bonus now and keep that cash in your pocket now, for other things. Always delay paying Uncle Sam as long as you legally can, without incurring interest or penalties.

Agreed. The 7.3 motor is strong, likes fuel but will go. The 6.6 gas burning GMs are now available with the Alison transmission.

Look into Section 179. You may be able to take a full immediate deduction. You may already be doing this on all your other business equipment but if you have not maxed it out this year then you can use it for the vehicle.

Section 179 of the U.S. internal revenue code is an immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time. The Section 179 deduction can be taken if the piece of equipment is purchased or financed and the full amount of the purchase price is eligible for the deduction.

KEY TAKEAWAYS
Section 179 of the IRC allows businesses to take an immediate deduction for business expenses related to depreciable assets such as equipment, vehicles, and software.
This allows businesses to lower their current-year tax liability rather than capitalizing an asset and depreciating it over time in future tax years.
Section 179 is limited to a maximum deduction of $1,080,000 and a value of property purchased to $2,700,000 for the year 2022.
Section 179 Explained
Taking the cost of the equipment as an immediate expense deduction allows the business to get an immediate break on their tax burden whereas capitalizing then depreciating the asset allows for smaller deductions to be taken over a longer period of time. The Section 179 expensing method is offered as an incentive for small business owners to grow their businesses with the purchase of new equipment.

Section 179 expense deduction is limited to such items as cars, office equipment, business machinery, and computers. This speedy deduction can provide substantial tax relief for business owners who are purchasing startup equipment. The equipment must qualify for the deduction per the specifications within Section 179 of the tax code and the purchase price must be within the dollar amount ranges allowable by the code. The property must be placed in service during the tax year for which the deduction is being claimed. Equipment covered by the Section 179 deduction might also qualify for bonus depreciation, which further reduces the business owner's tax bill.
1

Did you have the CP4 fuel pump failure?

Be careful using the Section 179 deductions as they are subject to recapture rules. Section 179 is a great tool but it can also bite you and you always have to read the fine print. Here's a little copy and pasted accounting story about how it works.

In 2018, Jerry claimed a $53,000 Section 179 deduction on a qualifying pickup truck. In 2020, Jerry’s wife drives the truck and Jerry’s business use drops to zero.

Jerry violated his 50 percent business-use agreement with the government. Now he has phantom income to report (called “recapture”), and he’s going to pay the price for breaking his tax promise on the Section 179 deal.

The pickup truck is listed property. This means that Jerry must recompute his allowable deductions using the ADS straight-line depreciation tables, which will result in the following:
·
$5,300 deduction (10 percent of $53,000) in 2018
·
$10,600 deduction (20 percent of $53,000) in 2019

In 2018, Jerry deducted his 90 percent business cost ($53,000) using Section 179. But now, with recapture, his ADS straight-line depreciation for 2018 and 2019 totals only $15,900 ($5,300 + $10,600).

So in 2020, the year of violation, tax law recaptures $37,100 ($53,000 - $15,900). Jerry must report the 2020 recapture income on the same form or line on which he (or his corporation) claimed the original $53,000 deduction in 2018.

For example, say Jerry operates as a proprietor who claimed his 2018 Section 179 deduction on Schedule C. In 2020, he reports the recapture income as other income on Schedule C.

Holy smokes! On Schedule C, that means the Section 179 recapture is going to create self-employment taxes. Correct! The original Section 179 deduction reduced self-employment taxes.

On his recapture income, Jerry gets the double whammy: increased income and self-employment taxes.

"In 2018, Jerry claimed a $53,000 Section 179 deduction on a qualifying pickup truck. In 2020, Jerry’s wife drives the truck and Jerry’s business use drops to zero."

Jerry sounds like an idiot!!

Most people dont know about the recapture language and just dont think about it. Buy the truck, section 179 it, drive it a couple years and decide you need a bigger truck and pass that 179 truck on to your kid going off to college. Get audited, and boom, you just created yourself a big tax liability.

179 the truck in your business, Covid hits and your business goes out of business 2 yrs later, and you have to take a w-2 job with some other company. Boom, same thing, huge tax liability. Happens all the time. Literally. Most people do not think past the current moment in time and almost never think of the future ramifications of their current actions. Especially when dealing with taxes.

You would think they would be reminded every year they renew their vehicle tags and the notice is addressed and mailed to their business and they are reminded the truck is registered to their business unless they aren't doing that and this would be another red flag! Same with their auto insurance bill etc...

We bought brand new 2 LTZ Silverado’s and a Ford 150 last year. It was the last year for full 100 percent depreciation in Year One. We fully depreciated all in their first year. I’ve liked the Silverados, one had to go in the shop at 12k miles, but others wise they’ve been real nice to drive.

What about selling the truck after a few years? How long do you need to keep the truck?

If you're a Sub S, single member LLC or sole proprietor, all those rolls up to your personal return, so the truck can be in your personal name, as long as it is being used for business, even though you're taking the bonus or 179 depreciation. Most personal businesses are Sub S in order to avoid the self employment taxes.

Simple answer: You get the full depreciation up front and if the depreciation normally would be over 5 years, if you sell before the 5 years you will owe the IRS for the years you didn't own but got the depreciation for.

One day longer than whatever the IRS approved EUL for the vehicle or equipment is. In the case of a truck, 5 full yrs, to the day.

And that fuel is bout 50 to 75 cents a gallon cheaper. I never understood folks who don't pull and/or haul A LOT wanting a diesel.

I plan on having the business for far more than 5 years. If for some reason I don't then I'm either dead or wealthy enough to not be worried about recapture money. But it's really good information to know...one of the reasons I asked the question here as there are multiple small business owners and knowledgeable professionals. I'm meeting with my CPA next week and wanted to at least start learning about from a real world perspective.

Sounds like a good way to get audited.

Most businesses take advantage of sect 179 or just buying and depreciating a truck over time. As long as you are using the truck as intended, I think the risk of generating an audit would be very low.