Case Scenario:
Grace, drops by the office on the Monday after Thanksgiving. She says that over the holiday she was reviewing her books and projecting the remainder of the tax year. She projects that her Schedule C will show a net profit of $300,000 this year. This is substantially higher than in the prior year.
She is concerned that she will owe too much tax this year. You advise her that since she is cash basis she should attempt to defer her income to next year and accelerate her expenses into this year to reduce her tax liability. She mentions that she had been planning on purchasing a new $50,000 vehicle next year but that she can acquire it before the end of the year to save taxes this year. She says that she is trying to decide between a little BMW sports car or a Chevy Suburban. Which vehicle should she purchase to maximize her combined depreciation and section 179 expense deduction this year? How much of a write off would she get for each vehicle this year? Ignore any issues related to the miles per gallon that each vehicle will get.