Todd Evans

Does anyone know the official Gross Vehicle Weight for the 2019 e tron?

Tronification

I looked it up before buying. I don’t have the figure handy but it’s well above the Section 179 threshold.

Todd Evans

Thanks, I just found it finally 6,900 lbs. Like you said, well above the 6,000 lb threshold.

mtberman

For US buyers, a $7500 income tax credit applies to personal use. For non-personal use, Section 179 business depreciation is possible, assuming the miles are predominately (more than 50%) for business and the vehicle meet other requirements. These benefits are separate (one is personal and the other is business) and can only be combined if they're pro-rated.

Todd Evans

What about a lease, I am looking to lease and my accountant says section 179 applies.

Tronification

I'm not sure what you mean by "pro-rated", unless you were talking about prorating among multiple business owners.
As far as I know, in the case of smaller businesses, i.e. S corporations and such, the $7.5K credit flows to the owner(s) and then the asset is depreciated normally (i.e. accelerated under 179) with a basis diminished by $7.5K, so the full combined tax benefit is realized.

It's essentially the same thing as buying a vehicle with a price diminished by $7.5K and paying for it with pre-tax money (i.e. pulling forward the entire depreciation into the current/purchase year).

Tronification

You need a different accountant in that case.

The depreciation (and subsequently accelerated depreciation under Section 179) applies to the actual owner of the vehicle, which in this case would be VW Credit. As a lessee, whether individual or business, you do not depreciate anything that you lease. Some manufacturers (notably not Tesla) pass the $7.5K fed credit in the form of a purchase price reduction (i.e. capitalized cost reduction). The leased vehicle would start with a diminished cap cost and the lease payments would be calculated off of that and the stated residual. With a lease used for business purposes, you can deduct a pro-rated portion of the lease payment (full payment minus an "inclusion amount" and then prorated for your business use).

With leasing, I bet that most dealers would present the $7.5K credit as a discount they're giving you (even though it's not theirs to give) and that would make the price negotiation that much more annoying. Long story short, unless something has changed drastically in the recent months, with >50% business use, the math is MASSIVELY in favor of purchasing. Ask a knowledgeable accountant!

Todd Evans

I am seeing this: https://www.section179.org/section_179_leases/
I am not worried about the $7500 tax rebate they arQuick Replye building that into the lease.

drcollie2

Having done Section 179 buys for my business for many years, I only do them for 100% business use vehicles (i.e., my commercial trucks). You want to raise an eyebrow with the IRS, buying or leasing a luxury vehicle for business use is one way to do it. Keep a very detailed mileage logbook if you decide to go that route so that if you get audited, you have the proof of business vs personal mileage. My business is very small (Subchapter S Corp), and thought I was "under the radar" for IRS audits because I was so small and always did my taxes and returns on time - turns out I was not. I've been audited at random twice in thirty-one years, and they are not fun at all - pure misery. No mileage logbooks on a luxury SUV? Can't prove your business use? Disallowed, and maybe a penalty. How about that iMac computer you have at home purchased for the business? Or that trip to Vegas? That sort of thing. If you are squeaky clean, the audit goes much faster, but once they start finding things then they dig deeper and stay much, much longer. Be aware of the risks is all I'm saying. I could have put my E-Tron buy under my business, but the truth is it would be about 5% business use, 95% personal, so I kept it out of the company and did a personal buy on mine. Mr IRS shows up at my place all he sees are bareboned Ford and Isuzu Commercial trucks and they don't look twice at those.

mtberman

Good advice dr.

I won't get into a discussion of tax law here, since this is an e-tron forum, but based on what's posted above: Readers should check with the IRS (not google) for accurate information regarding recent developments in this area of taxation, and then check with a professional, before making any decisions.