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Expensing Vehicles

The most flexibility for depreciation occurs when a business purchases a vehicle over 6000# gross vehicle weight (GVW).  This includes cargo and most 3/4 ton trucks qualify.  Generally, we are able to deduct the full cost of this type of vehicle (considered business equipment) in the first year of service as long as there is enough net income from the business. Other, more limited expensing elections are available for vehicles under 6000# GVW.

One drawback of this election is that there are no remaining deductions for depreciation in the following years (if you elect to expense the entire amount).  If business income increases, you may be paying a higher percentage of tax in following years.  Still many businesses have the most need for cash in the early years of their business.

     
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