Question

I have a question about farm deductions. Last year I purchased a vehicle for my agricultural business and I would like to take the full deduction this year rather than depreciating it? Is that allowed?

Answer

The maximum Section 179 expense deduction is $510,000. It’s reduced dollar-for-dollar for qualified expenditures more than $2 million.

The Section 179 deduction is limited to:

  • The amount of taxable income from an active trade or business
  • $25,000 for SUVs and other vehicles rated at more than 6,000 pounds but not more than 14,000 pounds

The $25,000 limit doesn’t apply if your vehicle is:

  • Designed for more than nine passengers behind the driver’s seat
  • Equipped with a cargo area of at least six feet in interior length that’s not readily accessible from the passenger compartment
  • A vehicle that:
    • Has an integral enclosure fully enclosing the driver compartment and load-carrying device
    • Doesn’t have seating rearward of the driver’s seat
    • Has no body section protruding more than 30 inches ahead of the leading edge of the windshield

You can carry over costs for an unlimited number of years that:

  • You expense using the Section 179 deduction
  • Are limited due to the business income limitations

Vehicle expenses have a separate limitation for the maximum amount of depreciation you can take. The limitation is based on these factors:

  • If the vehicle is a car, truck, or a van
  • If it’s an electric vehicle
  • If you have chosen to take special or bonus depreciation
  • If the vehicle is bought or leased

You can carry over any amounts over the maximum that you can’t claim in 2017.

 

 

Related Topics

Related Resources

I have a question about self-employed tax deductions. What self-employed vehicle expenses am I eligible to deduct?

What vehicle expenses are you allowed to deduct when you are self-employed? Learn more from the tax experts at H&R Block.

Form W-4 End of Year Updates | H&R Block

Tax season is right around the corner! Consider how the withholding allowances claimed on your Form W-4 could affect your income tax refund by visiting the Tax Information Center blog.

Can I claim the earned income tax credit if I’m married filing separately?

Learn whether you can claim the earned income tax credit if you are married and filing separately with advice from the tax experts at H&R Block.

I have a question about home renovation tax credit? Can I deduct the money I spent remodeling my home using home improv

Learn more about home renovation tax credits and get more back on your taxes with help from the tax experts at H&R Block.