"Hummer Rules" Have Changed | Tax Tip of the Week | No. 95

 "Hummer Rules" Have ChangedNew Bonus Depreciation RulesNew SUVs with a gross weight of over 6,000 pounds, placed in service in 2011, can now be a 100% write-off if used 100% for business.This is due to the new bonus depreciation rules.  (See TTW #79 for a closer look at depreciation options).  Previously, SUVs were limited to a maximum first year deduction of $25,000.  Several years ago this limitation was put into the tax code to prevent large deductions for such vehicles---many called it the “Hummer Rule”.New pickup trucks with loaded weights over 6,000 can also use this rule.  Depreciation rules for work related automobiles remain unchanged for 2011.If you use a vehicle for business, be sure to closely document your mileage even if deducting actual expenses.  A 100% business use argument is sometimes hard to substantiate in an audit.  If you can’t prove 100% business use, you can still use the limited deduction as long as the business use exceeds 50% of the total yearly mileage.Also, the SUV must be new---used vehicles do not qualify.Give us a call if you want more details.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt – the guy behind TTW…until next week.