Can an LLC that files as sole proprietorship write off the amount paid for a pickup truck used for business?

by Chad Schweighart, CPA | May 22, 2019

I am looking at purchasing a new pickup truck for my business that has a gross vehicle weight rating of over 6,000 lbs. I know that with the changes to Section 179 I can write off the full amount paid for the truck this tax year as long as I fall within the use guidelines. I am an LLC that files as a sole proprietorship. Does this still apply to my LLC due to the way I file? If it does, do I have to get a loan in the business name or can I have the truck titled in the business name and finance it personally?

The fact that you are an LLC and file as a sole proprietor does not affect the use of Section 179 depreciation for the truck. As long as you meet the use standards for the truck, you will be able to write off the truck, according to the rules of Section 179.

As for how to finance the vehicle, the answer is not as simple. If the truck is going to be used 100 percent for the business, then it would make sense for the truck to be titled and financed through the business. You can have a de minimis amount of personal use of the vehicle during the course of the year and not have to worry about adding in personal use of the vehicle to your Schedule C. If this is going to double as a personal vehicle, then I would title it personally and track the business mileage versus personal mileage for the truck. This will allow you to determine the percentage of business use of the truck. You will need this to determine if the mileage rate is more beneficial versus the actual expenses incurred for fuel, maintenance, etc. Note that depreciation is already included in the standard mileage rate, so you would not be able to use the full standard rate and depreciate the vehicle under Section 179.

You may want to consider leasing the truck if it is going to be 100 percent business use. This would allow you to deduct a larger portion of the payments you are making each month as well as the actual expenses incurred for fuel, maintenance, etc. No depreciation would be involved in this case, however. 

I would consult your CPA who prepares your taxes for more advice.

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Answered by: Chad Schweighart, CPA, is an accounting manager with Gift & Associates in Mechanicsburg, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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