Heavy Sport Utility Vehicle (SUV) Business Depreciation ($27,000 Limit) - How to Enter

[slackna]

Client purchased an SUV over 6,000 pounds. IRS caps the maximum first year deduction at $27,000 between Section 179 and bonus depreciation. 

Any tips for how to enter this in Proseries? The software keeps populating the Special Depreciation Allowance in ADDITION to the $27,000 Section 179 amount which put this over the limit. Tried both the Car and Truck Expense Worksheet and the Asset Entry Worksheet, but can't find the combination of checkboxes and data entry to stay within the $27,000 cap.

Here's the rule: 

Limit for sport utility and certain other vehicles.

 You cannot elect to deduct more than $27,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax years beginning in 2022.

Thanks!

[TaxGuyBill]

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@slackna wrote:

IRS caps the maximum first year deduction at $27,000 between Section 179 and bonus depreciation. 

Here's the rule: 

Limit for sport utility and certain other vehicles.

 You cannot elect to deduct more than $27,000 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service during the tax years beginning in 2022.

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You may want to re-read that rule.  It does not limit Bonus depreciation.

[slackna]

@TaxGuyBill - Thanks for your quick response. So your understanding is my client can take $27,000 for Section 179 PLUS Special Depreciation Allowance? When I re-read the rule, I don't see where it limits bonus depreciation (or even uses terms like bonus depreciation or special depreciation allowance.) 

Can you please clarify? 

[TaxGuyBill]

Bonus can take 100%, so unless you have a special reason to use Section 179 (such as perhaps for state purposes), there is no need to even use Section 179.

If you don't want the full 100%, you would need to elect OUT of Bonus.  Then take Section 179.

[slackna · Accepted solution]

Thanks, @TaxGuyBill. I appreciate your help. That worked.