Section 179 of Passenger Vehicles

Taxpayers may expense up to $105,000 of qualified property place din service in 2005. The expensing phase-out threshold begins at $420,000 and ends at $525,000.

Limitation on Use of Section 179 for Certain Passenger Vehicles

The ability of taxpayers to claim a code Section 179 write-off has been reduced from $105,000 to just $25,000 for vehicles not subject to the Code Section 280F luxury vehicle depreciation limitations (i.e. any four-wheeled vehicle rated at over 6000 pounds unloaded gross vehicle weight, or any truck (or van build on a truck chassis) with a gross vehicle weight rating over 6,000 pounds.

This provision applies to SUV?s rated at 14,000 pounds gross vehicle weight or less (i.e., in place of the present law 6,000 pound rating).

While the legislation refers to a ?sport utility vehicle? (SUV), the statutory definition is extended to any ?vehicle primarily designed to for use on public roadways? which is not subject to Code Section 280F limits (i.e., any car, truck or van over the 6,000 pounds definition).

The new law excludes three categories of vehicles:

Any vehicle designed to have a seating capacity of more than nine persons behind the driver?s seat (i.e., a hotel shuttle van).

Any vehicle equipped with a cargo area of at least 6 feet in interior length which is an open area, or is designed for use as an open area but it enclosed by a cab and is not readily accessible directly from the passenger department such as a pickup truck.

Any vehicle which as an ?integral enclosure, fully enclosing the driver compartment and load carrying device,? does not have seating rearward of the driver?s seat, and has no body section protruding more that 30 inches ahead of the leading edge of the windshield (e.g., and electrician?s van).

Qualified Non-Personal Use Vehicle (QNUV), regardless of weight, has always been exempt from the substantiation requirements applicable to listed property [IRC Sec. 274(d)] and are now exempt from the Section 280F luxury auto limits, regardless of their weight.

A QNUV is a truck or van that by reason of its design (modification) is not likely to be used more than a de minimis amount for personal purposes [Reg. 1.274-5T(k)(2)(i)(2)]. (i.e., a van that has only a front bench for seating, in which permanent shelving that fills most of the cargo area has been installed.