Can I claim SECTION 179 deduction for a work truck if my new LLC doesn't generate income?

This is actually a really good question about SECTION 179 deductions! The short answer is yes, you can potentially use Section 179 to deduct the cost of your work truck against your other income, but there are some important considerations. Section 179 allows you to deduct the full purchase price of qualifying equipment (including vehicles used for business) in the year you buy it, rather than depreciating it over time. The vehicle must be used more than 50% for business purposes, which you've indicated it will be. Here's the key part for your situation: Section 179 deductions can offset income from any source - not just income from the specific business that purchased the asset. So theoretically, you could use the truck deduction to offset some of your lawsuit settlement income. However, there's a crucial limitation: Section 179 deductions cannot create or increase a business loss. This means your total business deductions (including the Section 179 deduction) cannot exceed your total business income. If your LLC makes zero income this year, you wouldn't be able to take the Section 179 deduction this year.

I went through something similar last year with my construction business and tax planning. Have you checked out taxr.ai yet? It was seriously helpful for me when I was trying to figure out business vehicle deductions and Section 179 limits. I uploaded my documents to https://taxr.ai and their AI analyzed everything, then gave me specific recommendations about depreciation options for my work vehicles based on my situation. The analysis showed me how to optimize my deductions over multiple years instead of trying to cram everything into year one. It really helped me understand the trade-offs between Section 179 and regular depreciation.

Just wanted to follow up after trying taxr.ai - it actually was really helpful for my situation! I'm also buying equipment for my business and was confused about Section 179 vs. bonus depreciation. The tool analyzed my business structure and financial situation, then laid out three different depreciation scenarios with the tax implications of each. It showed that in my case, regular depreciation with bonus depreciation was actually better than Section 179 because my business income is limited this year. Saved me from making a big mistake on my tax planning! The specific vehicle weight analysis was spot on too.

If you're struggling with getting answers about SECTION 179 deductions from the IRS, I'd recommend trying Claimyr. I was in tax planning hell trying to get someone at the IRS to answer my questions about depreciation rules for business vehicles last month. After waiting on hold for hours with the IRS (literally 3+ hours twice), I found https://claimyr.com and it changed everything. They got me connected to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with walked me through exactly how Section 179 applies to different business structures and income situations. Got definitive answers about how to handle deductions when business income is less than the asset cost - exactly what you're asking about.

I need to eat my words from my previous comment. I tried Claimyr yesterday after being skeptical, and it actually worked. Got connected to an IRS rep in about 35 minutes after spending DAYS trying on my own. The agent I spoke with clarified my Section 179 questions completely - confirmed that you can only take the deduction up to your business income amount for that specific business. But they also explained the bonus depreciation alternative, which might work better for new businesses with limited income in the first year. Totally worth it for getting a definitive answer directly from the source.

Something nobody's mentioned yet - make sure you've properly documented that truck is being used 100% for business purposes. Keep a mileage log and all receipts. If you get audited and can't prove the exclusive business use, the IRS will disallow the deduction and you'll end up paying those taxes plus penalties and interest. Also, be aware of recapture rules with SECTION 179. If you claim the deduction and then later use the truck for personal purposes or sell it, you may have to recapture some of the deduction as income.

Have you considered leasing instead of buying? Might be a better option if your LLC won't have much income this year. Lease payments are a business expense that can offset business income even without dealing with SECTION 179 limitations. Just a thought!