Last year, the IRS issued temporary rules regarding this section of the code, but the new rule will permanently exempt these vehicles and allow full expensing. Previously, light trucks and vans were treated the same as passenger automobiles and, therefore, small businesses were not permitted to treat these vehicles as business assets eligible for first year expensing.
"Because light trucks and vans make up a majority of fleets of HVACR contractors, this is fantastic news for our industry," stated Paul T. Stalknecht, president and CEO of the Air Conditioning Contractors of America (ACCA). "The change is going to place up to several thousands of dollars a year back in contractors' pockets due to reduction in tax liability."
To qualify for this extended depreciation, the light trucks and vans must be modified to meet business needs, such as outfitting them with ladder racks, tool bins, or a company logo. Trucks and vans straight off the lot won't qualify.
The change is effective retroactive to July 7, 2003.
Publication date: 07/12/2004