If you or your spouse runs a business (including a sideline business), Section 179 of the tax code permits a first-year “expensing” deduction for equipment purchases. This deduction had been set at $25,000 per year but the 2003 tax law quadrupled that amount, to $100,000. The full $100,000 deduction is available only if you buy no more than $400,000 worth of equipment in 2003. Excess purchases reduce your writeoff.
Business cars don’t qualify for the full expensing deduction but sports utility vehicles (SUVs) are considered trucks, not cars, if they’re over 6,000 pounds. Trucks qualify for the full expensing deduction.
Say your spouse buys an SUV for $50,000, which is used for business 60 percent of the time. You’ll be entitled to a $30,000 deduction (60 percent of $50,000) this year. For any expensing deduction, the equipment must be in use by December 31, no matter when you actually make the payments.
