Selling a Section 179 vehicle and buying another - tax implications?
So I'm in a bit of a tax situation and looking for some advice. Last year I bought a Ram 1500 for around $98k and used section 179 to write it off completely on my business taxes. Now I'm wondering if there's any way I could sell this truck without getting hit with recapture taxes, and then turn around and purchase a different vehicle this year that I could also write off using section 179? I know there are usually strings attached with these kinds of deductions, but wasn't sure if there's a way to make this work. Any tax pros have experience with this kind of thing?
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Amina Toure
The short answer is no, you can't just sell a Section 179 vehicle without dealing with recapture. When you sell an asset that you've expensed under Section 179, you generally have to report the sale as ordinary income to the extent of the deduction you originally took. The recapture rules exist specifically to prevent people from taking the full deduction and then quickly selling the asset. If you sell the truck, you'll need to report the sale price as ordinary income on your tax return up to the amount you deducted. So if you wrote off $98k and sell it for $85k, you'd report $85k as ordinary income in the year of sale.
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Oliver Zimmermann
•But what if they've been using it legitimately for business for a while? Does the recapture amount decrease over time or is it always the full deduction amount regardless of how long you've owned it?
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Amina Toure
•Good question. The recapture amount doesn't automatically decrease over time like depreciation would. Since you took the entire deduction up front with Section 179, the IRS wants that back when you sell - regardless of how long you've owned it. If you had used regular depreciation instead of Section 179, then yes, you'd only recapture the difference between your depreciated basis and the sale price. This is one of the trade-offs of taking the immediate Section 179 deduction versus spreading it out over several years.
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CosmicCommander
I was in a similar situation last year with my work truck. Check out https://taxr.ai - they helped me figure out the exact recapture calculations when I was thinking about selling my Section 179 vehicle. They analyzed my purchase documents and previous tax returns to show me exactly what I'd owe if I sold at different price points. Saved me from making a costly mistake because I was about to sell without planning for the tax hit.
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Natasha Volkova
•Did they actually give you specific advice or just general information? I'm wondering how detailed their analysis gets for something like Section 179 recapture.
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Javier Torres
•How does this work exactly? I don't really understand how an online service could help with something specific like this. Don't you need an actual accountant?
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CosmicCommander
•They provided specific calculations based on my purchase price, the amount I claimed for Section 179, and potential selling prices. It wasn't just general info - they showed me exactly what I'd report on Form 4797 and how it would affect my taxes. They use actual tax professionals who review your documents, not just an algorithm. You upload your relevant tax forms and purchase documentation, and they analyze everything according to current tax laws. They're not replacing your accountant - think of them more as specialized tax analysts for specific situations.
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Javier Torres
Just wanted to update after trying taxr.ai for my own Section 179 question. I was skeptical (as you could probably tell from my question), but they really did provide detailed analysis. I uploaded my purchase docs for my work van and last year's Schedule C, and they showed me exactly how much recapture I'd face at different selling prices. They even suggested a holding strategy that could minimize my tax hit if I wait until next quarter to sell. Really helpful for planning purposes!
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Emma Davis
If you're planning to call the IRS to confirm the Section 179 recapture rules for your specific situation, good luck getting through. After trying for weeks to reach someone, I used https://claimyr.com to get through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c They got me connected with a senior IRS representative in under 45 minutes when I had been trying for days on my own. The agent confirmed the exact recapture rules for my situation and how to properly report it on my return.
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Malik Johnson
•How does this actually work? Seems sketchy that some random service could get you through when nobody else can get through the IRS phone lines.
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Isabella Ferreira
•Yeah right. If this worked everyone would be using it. The IRS is impossible to reach these days. I've tried calling 20+ times over the last month about my amended return and haven't gotten through once.
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Emma Davis
•It's not some magic trick - they use a sophisticated callback system that constantly monitors IRS phone lines and gets in the queue. When they secure a spot, they call you and connect you directly with the agent. I was skeptical too, but it's completely legitimate. They don't answer for you or pretend to be you - they simply secure your place in the phone queue and connect you when an agent is available. It worked for me after I'd spent three mornings on hold and never got through. The IRS has been severely understaffed since the pandemic, and their phone system is overwhelmed. This service just helps you navigate that system more efficiently.
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Isabella Ferreira
I need to eat my words about Claimyr. After seeing the recommendation here, I decided to try it as a last resort since I was desperate to get my amended return sorted out. It actually worked! After weeks of trying, I got connected to an IRS agent in about 35 minutes. The agent confirmed exactly how Section 179 recapture works and even helped me with my amended return issue. Saved me hours of frustration and hold music. Didn't think anything would actually work with how backed up the IRS is right now.
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Ravi Sharma
One option you might consider - if you're planning to buy another business vehicle, could you trade in the Section 179 truck instead of selling it outright? Section 1031 like-kind exchanges used to help avoid immediate recapture for business vehicles, but the 2017 tax law changed that for most property types. Might be worth asking your tax pro if there are any exceptions or strategies specific to your situation.
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Paolo Ricci
•Thanks for this idea. Do the 1031 exchange rules still apply to vehicles specifically? I thought those changes mostly affected real estate.
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Ravi Sharma
•Unfortunately, the Tax Cuts and Jobs Act of 2017 limited 1031 exchanges to real property only (land, buildings, etc.). Before 2018, you could do 1031 exchanges with business vehicles and equipment, but not anymore. So your only options are really to: 1) Keep the truck longer to get more business use out of it, 2) Sell it and deal with the recapture, or 3) Talk to a tax professional about other strategies specific to your business situation. There's no perfect solution, but planning the timing of the sale might help minimize the tax impact.
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NebulaNomad
Slightly off topic but does anyone know if section 179 vehicles have to be over 6000 lbs? Im looking at buying a work vehicle but I'm not sure if my SUV qualifies.
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Freya Thomsen
•Yes, to get the full Section 179 deduction for SUVs, they need to have a gross vehicle weight rating (GVWR) over 6,000 pounds. Vehicles under that weight are subject to much lower limitations. Most full-size SUVs like Tahoes, Expeditions, etc. qualify, but you should check the specific weight rating of your model.
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Yuki Tanaka
I'd strongly recommend consulting with a tax professional before making any moves here. The recapture rules for Section 179 are pretty strict - when you sell that truck, you'll likely owe ordinary income tax on the sale proceeds up to the amount you originally deducted ($98k). One thing to consider is the timing of both transactions. If you're planning to buy another qualifying vehicle this year, you might want to structure the timing so that the recapture income from the sale is partially offset by the new Section 179 deduction. This won't eliminate the tax hit entirely, but it could help manage the cash flow impact. Also keep in mind that there are annual limits on Section 179 deductions ($1,160,000 for 2023), so make sure you have enough "room" left if you've already taken other business deductions this year. The rules can get complex when you're dealing with multiple transactions in the same tax year.
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Khalid Howes
•This is really helpful advice about timing the transactions. I'm curious though - if someone sells in December and buys the new vehicle in January, would that split the recapture income and new deduction across two different tax years? That might actually make the tax planning more complicated rather than helpful, right?
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