QUOTE
Suddenly $100,000 Tax Deduction Proves a Marketing Bonanza
By Jonathan Weisman
Washington Post Staff Writer
Friday, November 7, 2003; Page A01
When Congress this year decided to allow small-business owners, doctors, lawyers and real estate salespeople to deduct up to $100,000 from their taxable income for the purchase of a luxury SUV, Texas car-dealership magnate Jerry Reynolds could hardly believe his good fortune.
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When lawmakers began writing this year's $350 billion tax-cut plan, they looked for ways to help the economy by encouraging small businesses to invest in new equipment, which could include computers, rotary saws or photocopiers. Congress raised the maximum annual value of the deduction to $100,000, through 2005. At the time, environmentalists implored tax writers to disqualify SUVs, but lawmakers declined. With the top business tax rate at 35 percent, Washington effectively cut $18,900 from the price of a $54,000 Escalade, bringing its cost more in line with an Oldsmobile Aurora sedan.
The windfall is starting to get notice.
\"Buy Yourself an SUV for Christmas,\" encourages RIA, a New York-based tax information firm.
\"Bigger Depreciation/Expensing Deductions for Autos, Trucks, SUVs and Vans,\" advises a newsletter from Dallas accountant Barry N. Finkelstein.
\"Write-Off 100% of Your New SUV? Yes,\" blares a flier from Dugan & Lopatka, an accounting firm in the Chicago suburb of Wheaton, Ill.
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So many new models are just over 6,000 pounds that Reynolds suspects that automakers have their eyes on the tax code. A 2003 two-wheel-drive Dodge Durango weighs 6,050 pounds.
\"It's not really a loophole per se,\" Massoth said. \"It's just that a lot of these vehicles are getting to the size where they no longer qualify as passenger vehicles under the Internal Revenue Code.\"
When the equipment write-off was limited to $25,000, it was not very attractive to car buyers, said Bob Trinz, a senior tax analyst at RIA. A radiologist could easily purchase that much X-ray equipment in a year, using up the allotted tax break.
But now, Trinz said, there's plenty of room left for that $65,000 Porsche Cayenne. \"The tax breaks have never been more compelling than they are this year,\" Trinz said.
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By Jonathan Weisman
Washington Post Staff Writer
Friday, November 7, 2003; Page A01
When Congress this year decided to allow small-business owners, doctors, lawyers and real estate salespeople to deduct up to $100,000 from their taxable income for the purchase of a luxury SUV, Texas car-dealership magnate Jerry Reynolds could hardly believe his good fortune.
....
When lawmakers began writing this year's $350 billion tax-cut plan, they looked for ways to help the economy by encouraging small businesses to invest in new equipment, which could include computers, rotary saws or photocopiers. Congress raised the maximum annual value of the deduction to $100,000, through 2005. At the time, environmentalists implored tax writers to disqualify SUVs, but lawmakers declined. With the top business tax rate at 35 percent, Washington effectively cut $18,900 from the price of a $54,000 Escalade, bringing its cost more in line with an Oldsmobile Aurora sedan.
The windfall is starting to get notice.
\"Buy Yourself an SUV for Christmas,\" encourages RIA, a New York-based tax information firm.
\"Bigger Depreciation/Expensing Deductions for Autos, Trucks, SUVs and Vans,\" advises a newsletter from Dallas accountant Barry N. Finkelstein.
\"Write-Off 100% of Your New SUV? Yes,\" blares a flier from Dugan & Lopatka, an accounting firm in the Chicago suburb of Wheaton, Ill.
....
So many new models are just over 6,000 pounds that Reynolds suspects that automakers have their eyes on the tax code. A 2003 two-wheel-drive Dodge Durango weighs 6,050 pounds.
\"It's not really a loophole per se,\" Massoth said. \"It's just that a lot of these vehicles are getting to the size where they no longer qualify as passenger vehicles under the Internal Revenue Code.\"
When the equipment write-off was limited to $25,000, it was not very attractive to car buyers, said Bob Trinz, a senior tax analyst at RIA. A radiologist could easily purchase that much X-ray equipment in a year, using up the allotted tax break.
But now, Trinz said, there's plenty of room left for that $65,000 Porsche Cayenne. \"The tax breaks have never been more compelling than they are this year,\" Trinz said.
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