Hey, Sharon, today we're going to be talking about another code section for the Internal Revenue Service. I know how you love these, but it is a pretty important one because we get a lot of questions about company vehicles and purchasing a vehicle for your business and so forth. And that's really what Section 179 and accelerated depreciation are dealing with for most CRNAs. There are some CRNAs that are buying their own equipment. They're gas machines and so forth. And this can have another connotation for them. Not getting into the weeds because we don't want everybody to go to sleep today, but just kind of tell you about some of the basics here, understand it, a little bit about how it works so that as you're looking at your business and you're talking with your tax professionals and so forth, you can be more educated about it and be able to understand at least the broad brush concept of it. Section 179, again, it's just part of the tax code that enables small businesses to deduct purchases of equipment, software, and so forth throughout the tax year. One thing that's pretty important there is that even if you finance that equipment or that vehicle, you can still utilize Section 179. In other words, Sharon, you don't have to go in and pay cash for a car. If you go in and you finance it, you can still utilize Section 179. We'll kind of run through this in just a minute here. But let's say, for example, you purchased a car that was $80,000 and you said you used it 100% for work, OK, just round numbers here. The potential through 179 allows you to deduct 100% of that depending upon the price. And I'll get into that in a minute. You can't use 179 on an $80,000 vehicle. That's where accelerated depreciation comes in. But you're able to actually write that off on your taxes that year instead of spreading it over its useful life expectancy. And the useful life expectancy of a vehicle is five years. But Section 179, you think of it as a way to increase your tax deduction in that particular year. The year you purchased it. The year you purchased it. That's a really good point. You have to take delivery of the vehicle in the year in which you are taking the deduction. So at the end of the year, a lot of people want to go out and buy vehicles. You remember a few years ago, we had a shortage of vehicles. So even if you put a down payment or even if you paid for it in full, but you didn't receive the vehicle, you did it in December, but you didn't receive it until January, you cannot take it for that year. You have to actually take receipt of the vehicle. So there are some rules around this. Section 179 is for vehicles over 6,000 pounds. What's the purpose of that? To make sure you don't buy a sporty sports car? Yeah, I mean, if it's under 6,000 pounds, you can still take depreciation on it. You just have to spread it out over its useful life expectancy. So there are some electric vehicles that qualify because the batteries are so heavy, even if they might be a little smaller car and it's gross vehicle weight, GBWR. Pickup trucks, there's a lot of pickup trucks out there and they basically, for the most part, they're over 6,000 pounds. And then larger SUVs are over 6,000 pounds. So these are some vehicles. There's actually, if you Google vehicles, GBWR over 6,000 pounds, it'll usually put 2024. It'll usually give you a list of all those vehicles. So if you're thinking about a particular vehicle out there to utilize for this, you can Google what's GBWR. And if it's over 6,000 pounds, make sure you got the model correct because there are certain models, the truck jeeps, what are they called? Commanders or something now. I think the Overland and the Rubicon are over 6,000 pounds, but the other ones aren't. So it can be a different model and it doesn't qualify. So make sure you understand that as you're looking at it as well. So different vehicles qualify for it, but there are some limitations on 179. One is a personal use limitation. So if you buy a vehicle for business use, in order to utilize section 179, it has to be utilized more than 50% for business use. It's gonna be pretty hard to duct a vehicle 100% for business use, especially for a CRNF. And I say that because you get off work and you stop and you pick up something at Walmart. Well, that's not business use at that point. If you drive a vehicle directly to work and you're utilizing it for business and you're traveling in it, and then you drive it directly home and then you have another car available that you drive for personal use, maybe you could paint that picture, maybe. But trying to get something 100% is tough, but it must be used over 50% of the time for business to qualify for 179. My app tells me exactly what's personal, what's business. Swipe right, swipe left. Nice, and what app are you using just to track your- Oh, that QuickBooks self-employed app. Yep. And that tracks everything. At the end of the year, I know exactly how many miles were business miles, how many miles were personal miles. Well, just as a sidebar, you're gonna kick out of this. I had a client the other day say that their speedometer was broken, so they couldn't take actual mileage. Because I was like, I don't know which way you're gonna come out best, taking actual mileage or taking actual expenses. And they said, well, we've been taking expenses just because the speedometer doesn't work. And I told them about the app. I said, well, you can get the app and it'll track your miles for you and I'll be on there and it's pretty easy. And they were just like, wow. I was like, you probably, listening to them, they probably would have come out better doing mileage than they did actual expenses. So that's a really good point. If the vehicle's over 6,000 pounds, the maximum amount, and I alluded to this earlier, in 2024 that you could deduct is $30,500. Anything over and above that, back to my $80,000 example, has to be depreciated over an additional four years. Section 179 gives a limitation on vehicles. That's where accelerated depreciation, as we're gonna talk about in just a minute, is gonna come in. And those rules have changed as well and we'll get into that. If it's under 6,000 pounds, remember, you can buy a vehicle, Sharon, for business use under 6,000 pounds, but your deduction is limited to $12,200 in the first year and the rest of it has to be depreciated over four years. If you're leasing a vehicle, you cannot take Section 179. Instead, you would deduct the lease payments for a percentage of that as a business expense. And you deduct mileage if you have a leased vehicle? Well, that's built into most people's lease payments, so the miles are. You can't take it as a business expense, is my question. You're gonna take your lease payment. So is this the reason why a lot of people believe in leasing a vehicle? I mean, some people do the calculations and they feel like they're better off leasing a vehicle than buying, and it really depends on your pattern. If you're that person that wants to change every two years and basically, when you're leasing a vehicle, basically, you're driving off that depreciation in the first two years. You know how the value plummets as soon as you drive it off the lot in most cases? You're basically just covering that drop in value there. So you could come out better if you're in that scenario, if you always wanna drive a brand new car, but I don't know. I mean, I think over time, it's probably better to purchase a vehicle, depending upon which vehicle and how much depreciation comes off of it and so forth, but it's to each their own, really. An overview of accelerated depreciation. We talked about section 179. Accelerated depreciation, we can layer on top of. So accelerated depreciation, you get a larger depreciation in the earlier years of whatever that ownership interest is, whether it's a piece of equipment or a vehicle or whatever. So it allows you to take more during the early years, and that basically lowers your taxable income. It gets you a bigger deduction, and in some cases, it increases your cashflow because you're paying less in taxes. So you see the reasoning behind doing this, especially if you're gonna make a whole lot more money in one year than you are the other year. Well, go ahead and take the accelerated depreciation now, so you're in a higher tax bracket. You save on that versus waiting till later to take it. But bonus depreciation allows you to depreciate those assets faster, and this year, you can claim up to 80% of their depreciable basis. And that was 100%, and then it's 80, and then 60, and then 40, and 20, and then it goes away. Bonus depreciation is not gonna be here forever. In fact, in 2026, I think, remember in earlier sessions, we talked about the Tax Cuts and Jobs Act. This thing somewhere around there is gonna go away. But back to our example earlier, Sharon, you've got an $80,000 vehicle, and you're using 100% just to keep the numbers round for business purposes. You can then take $64,000 of that off on your taxes. So if you made 200,000, it's like you made 136. So that is the sizzle behind bonus depreciation. Remember, bonus depreciation is going away, so every year you wait, that bonus depreciation gets lower and lower. Not that you can't still depreciate it, you just don't get it all in that upfront. And for some people, that's pretty important. You can use Section 179 and bonus together, but Section 179 is not going away. The problem with it, especially as the price of vehicles has gone up, is that you've got that cap on it, so you don't get the full purchase price there upfront. And for people that need or want that, that can definitely be a big deal in the long run. So if you made a lot of money one year, go get you a new vehicle. Is that what I'm hearing you say? Hey, if that works for you and your tax advisor, that might be the thing to do. But again, you do need to document that it is for business use, making sure you're getting that percentage of business use right. Those are important things upfront, because that percentage, remember, if you paid it $80,000 for a vehicle and you use it 70% of the time for business, well, that's $56,000. Okay, that's not 80. So you can't deduct it all if you're using it. It's whatever percentage you use for business that you're utilizing it. All right, so again, remember what bonus depreciation is, over 6,000 pounds, 80%. Bonus depreciation is only $8,000 for vehicles under 6,000 pounds. Remember some electric cars and vehicles and so forth do qualify for bonus depreciation as well. And there are other benefits that might be deductions that you might be able to take on some of the green vehicles as well. Again, just kind of an overview of section 179 and accelerated. This, we could spend hours talking about this. It is meant to be a great overview. So you've got kind of a basic understanding. This is much more detailed, much more complicated than we're making it here today. But the idea is for you to just understand it, be able to speak a little bit more intelligently about it, maybe taking some of these ideas to your tax advisor and saying, can I do this? Because I will tell you, having been in this industry for a long time, most tax advisors are not giving you advice. You come to them with ideas and they say, oh yeah, you can do that. You say, well, why didn't you tell me that? So that's kind of the idea here.

Section 179

accelerated depreciation

small businesses

CRNAs

tax benefits