HALLIDAY & COMPANY is interested in helping you achieve your individual and business financial goals.  Understanding basic financial and tax concepts will help prevent costly mistakes and allow you to operate as efficiently as possible.  For this reason, we publish  “ACCOUNT-ABILITY” as a resource of helpful information, which we hope, will benefit you personally and/or as a business owner.

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This newsletter offers factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects.  No party assumes liability for any loss or damage resulting from reliance or use of this material.

SPORT UTILITY VEHICLE DEDUCTION LIMITED AFTER 2007

 September 2007 Continued

Kiddie Tax Reprieve

The ability to expense or write off large amounts for sport utility vehicles (SUVs) is being limited after 2007.

 

Currently, up to $25,000 of the cost of SUVs with loaded vehicle weights between 6,000 and 14,000 pounds can be expensed through accelerated depreciation (Sec 179).  The balance of the cost is depreciated over six years.  If you wait until 2008 to buy an SUV in that weight range, your first-year write-off for depreciation will be limited to $2,960.

 

However, some vehicles will still qualify for full depreciation expensing: pickup trucks with a separate cargo area at least five feet in length, farm vehicles and trucks or vans used to transport substantial amounts of equipment.

Congress has given families a short reprieve on the kiddie tax.  A significant tightening will take effect next year, not in 2007.  Under current rules, a child’s unearned income over $1,700, such as capital gains on stocks and dividends, is taxed at the parents’ marginal rate until the year the child is 18.  A new law raises that to 19 and, for full-time students whose earned income is less than half of their support, extends it to age 24 after this year.  So families have until December 31 to arrange to have kids born before 1990 sell assets and have the gain taxed at 5% instead of 15%.