Our company is about to purchase a new truck. This is a heavy 40,000 gvw commercial truck so we can 179 the full amount if we want. $250,000
But that will be more than our profits this year by the looks of it maybe $50k too much. So we can take $200k of the 179 this year
We have the option to lease it – true lease or do a capitol leave with a $1 buyout. So we can either 179 it with a capitol lease or do a real lease and deduct lease payments. We would rather do the full 179 this year, what happens to that 50k we can't deduct. Does it roll over to next year and we get to use the entire 50k that we couldnt take this year? (or whatever the number happens to be by the end of the year)
If you take a 179 deduction but cant use the full amount?
byu/caban2020 intax
Posted by caban2020
2 Comments
Yes, the depreciation will carry forward to next year or the years after that until it is used up.
https://www.law.cornell.edu/cfr/text/26/1.179-3
You should be careful because large Section 179 deductions on heavy trucks are closely watched by the Internal Revenue Service and mistakes in lease structure or business use can trigger recapture taxes interest and penalties later.
The good news is unused Section 179 deduction generally carries forward if your business income is too low to use it all this year so the unused 50K usually does not disappear. The risk is assuming you can automatically use it next year because future income limits and business use rules still apply.
In these cases, businesses often rush these truck writeoffs and later run into issues because the lease type and income projections were not planned carefully enough.