Tax Free Exchanges

Posted on June 19, 2015 by Wis Laughlin

UPDATE: Watch out!  The Tax Court recently ruled that using a related party as an intermediary disqualifies these transactions.  Many taxpayers do not realize that you can replace your business premises or investment property without having to pay taxes on the gain. It is called a “like kind exchange,” but  you need not actually exchange your property. You pay no current tax.  The gain is postponed by assigning the relinquished property’s basis to the new, replacement property.

You must follow the rules carefully, and I can’t cover them all here. However, just to summarize, to qualify for a like kind exchange, the relinquished property and the replacement property must both be held for business or investment purposes. Neither may be held primarily for sale or for personal use. Personal property and cash do not qualify. A sale of property followed later by reinvesting the proceeds in a like property does not qualify as a like kind exchange and is taxable. However, See THE NONEXCHANGE, below, for the rules covering exchanges that are not simultaneous.

If you receive property that does not qualify, or cash (called boot) property, the exchange may qualify, but there is taxable gain in an amount up to the boot’s value. Furthermore, if the relinquished property is mortgaged, you are treated as if you received cash (boot) equal to the debt.

THE NONEXCHANGE – A LIKE KIND EXCHANGE OF ANOTHER COLOR One transaction that qualifies for this treatment I call the “Nonexchange,” (or third party exchange). You use an “intermediary” to sell the relinquished real property at one point and buy for you a replacement party at another time. You must follow the rules on third party exchanges very carefully.

If you have questions about doing one of these transactions, please make an appointment. What I discuss above is the tip of the iceberg, but is a really valuable way to replace property without current taxation.

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WHO’S AFRAID OF PROBATE?

Posted on May 31, 2015 by Wis Laughlin

This article describes the executor’s duties. Don’t attempt to handle an estate without the help of an experienced lawyer. Do you want to look like the lady below?  To find out how to avoid the Probate process check out Wis’s Revocable Living Trust Package.

I recently attended an excellent 3 hour seminar offered by the Memphis Bar Association Probate/Estate Planning Law Section, of which I have been a member.  I received a list of tasks that the Executor or the lawyer must perform. See this Probate To Do List to get some idea of the job of the Executor and his attorney. The rest of this article lists only a few of the duties of an executor.

pile_of_papers

To “Probate”  means to prove and a will has no power until the Probate Court approves it. So with the help of your attorney, you must ask the Probate Court to approve the Will and appoint you as Executor. The Court will award “letters testamentary” to the Executor, to establish that he has authority over the property in the estate. As an Executor one must unwind the life of the deceased person and dispose of the Decedent’s property according to the decedent’s wishes.

The State of Tennessee and the Court has laws to protect everyone who might be affected by the estate, creditors, people named in the Will, Tenncare, everyone.

These are only a few of the Executor’s other  duties. The Executor must:

  • within 60 days after the initial Court appearance the executor must prove that he notified the beneficiaries, publish in the paper notices to creditors and put together an inventory of the estate assets.
  • collect income of the decedent.
  • locate all estate assets, brokerage and bank accounts, personal property and so on.
  •  collect life insurance.  .
  • collect debts owed the decedent.
  • distribute assets to beneficiaries or  sell them and give the proceeds to the beneficiaries.
  • Close charge accounts, club memberships, subscriptions.
  • pay, fight or settle creditors’ claims, mortgages and get receipts proving they are paid.
  • get a Tenncare release.
  • File tax returns. Obtain a tax ID number and must file tax returns for the decedent (and his surviving spouse) and for the estate the Executor must prepare and file timely Federal income tax for the decedent and the estate if required.
  • deal with beneficiaries and find out what personal items they want, distribute specific bequests to them and get receipts proving they are satisfied.
  • Once everything is done, the Executor must get receipts from the beneficiaries and get receipts from them.
  • Unless an accounting is waived, the Executor must prepare an exhaustive accounting, showing all assets with with the estate started, all transactions in all accounts and a balanced bottom line.
  • Make final settlement. The Executor will then provide a petition to the Probate Court showing that all has been done and asking that the Court approve the closing of the estate in an Order prepared by the attorney.

GO TO COURT – CLOSE ESTATE

Find a complete treatment of this process in the 3-volume treatise, Pritchard on Wills and administration of Estates (Matthew Bender – updated).

To find out how to relieve your family from spending the time and money needed to handle the Probate Court process after your death, check out Wis’s Revocable Living Trust Package.\

 

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Estate Planning Basics

Posted on August 11, 2011 by Wis Laughlin

DO YOU NEED AN ESTATE PLAN?

What you don’t know about that will can kill your family

Why don’t you have an up to date estate plan? You think you don’t need a will. Most of the time you are wrong. A will is for your family, not you. It saves your family a lot of time and money.  For example, most people think that without a will, the property a person with a spouse and young or kids will go one third to the spouse and one third to each of the kids. However because the kids are not adults the Court will appoint a guardian who will be paid to control and account for the minor children’s property until they reach 18. Then they will receive it outright. Wouldn’t you rather control these decisions.

  1. You don’t want to talk with someone you don’t know.

An attorney is called “Counselor” for good reason. An experienced estate planning attorney is easy to talk to. He has a duty to be on your side.  An estate planning attorney has years of experience helping clients. An experienced attorney is an easy going sounding board who knows countless ways to accomplish what you want.

3. You don’t feel ready

I use a questionnaire developed over 35 years to gather information from a client. It starts out with simple questions and suggests approaches that have worked for many other people. The simple answers help with harder questions. Then we meet in the interview and the client enjoys working with me to fine tune his estate plan.  The will can be designed to change as family members grow older.

  1. You just haven’t thought about your Will.

If you are reading this article, you are already thinking about it, and I suggest that you think about it. As you have seen above, without any estate planning, state law or the court makes decisions for you in many personal areas, such as who will be the guardians for your kids. Furthermore the law requires many tedious tasks, such as accounting and financial statements, paying for a bond.

5. Can your estate be too small to require a will?

This idea is  true in rare cases. You may not need a will if by deed or contract all property goes to a survivor (JTWROS or POD). It is smart to talk to an attorney to make sure this type of arrangement works. It won’t work if the survivor is deceased.

*FREE 1/2 Hour Offer:* Bring me any tax return, will, trust, or other legal document–You get a free 1/2 hour of advice, and I get to prove my value.

Estate planning is one of the most complex areas of the law. An uninformed person sentences his executor and family to much more bookkeeping, paperwork, taxes, legal fees, court costs, and frustration in general. As an Accredited Estate Plannerl, I can help you avoid all these unpleasant consequences and accomplish your wishes, be kinder to your family and more effective. (As explained in Background,Wis is an Accredited Estate Planner). Read about the demise of Tennessee gift and inheritance taxes below.  As you read on, notice how each tool can achieve your goals.

THE BASICS

YOUR WILL

Your Will is a document that transfers your property after your death. I have drafted hundreds of Wills and taken many of them through Probate Court.. With a Will you pick who gets your property. Without a Will, state law decides. For example, in Tennessee, your surviving spouse shares equally with your children, but not less than one third. At age 18 your children receive their share outright. With a Will, you pick who manages your estate – your Executor. Without a Will, a court appointed administrator manages your estate. With certain exceptions, he must post a bond. There are restrictions on nonresident executors. With a Will you may request a guardian to care for your minor children. Otherwise, the court appoints one.

A properly drafted Wlll saves money. For example, your Will can waive costly legal requirements for the estate, such as an executor’s bond, an inventory and a formal accounting. Likewise, a well-drafted Will avoids family squabbles by making your intentions clear. Don’t draft your own Will; it is far too easy to create an ambiguity. The laws are complex and unexpected. For example: (1) A new Will does not automatically revoke your prior Will, so you can end up with two Wills. (2) Adding hand-written changes to a Will may not work. (3) The law automatically revokes your Will if you later marry and have a child. (4) Your spouse can demand some of your property regardless of your Will. (5) If you divorce, each spouse is automatically written out of the other’s Will (and trust).

MINOR CHILDREN

Without planning, a minor inheriting significant property requires a court appointed legal guardian for the property, resulting in: significant legal costs, posting a bond, an annual accounting to the Court, restrictions on investment of the child’s assets. Finally, the guardian must give the property to your child at age 18, a delicate age. You may eliminate the expense of such a legal guardianship by creating a Trust for such property in your Will. The Trust provides many other benefits, as discussed below.

ASSETS THAT MAY THWART YOUR PLANNING

Your Will cannot dispose of life insurance and other death benefits unless they are payable to your estate. Also untouchable are real estate and bank and brokerage accounts held jointly with right of survivor ship (JTWROS). As your lawyer I can help you overcome these types of obstacles. Update your Will every year or two or when circumstances change.

YOUR POWER OF ATTORNEY

The second basic building block for estate planning is the Durable General Power of Attorney (DPOA). The DPOA authorizes a person you name to handle your legal affairs. It avoids the need for a guardianship if you become unable to handle your affairs. The DPOA is inexpensive, requires no court proceedings and works even if you lose mental capacity.

ADVANCE CARE PLAN (TENNESSEE’S “LIVING WILL”)

The Tennessee “Advance Care Plan”  allows you to tell your  physician and hospital to withhold certain treatments if you have specified medical conditions. It also allows you to name people to make medical decisions for you if you are unable. For example, if you are in a coma to avoid tube feeding.

ADVANCED PLANNING

TRUSTS

The Trust is one of our most useful estate planning tools. What is it and what can it do? A Trust is a legal relationship you create by agreement or by Will, under which you give cash or property to a Trustee. Following the Trust document, the Trustee manages and invests the Trust assets on behalf of the beneficiaries, selecting the amounts and times of Trust distributions. You pick the beneficiaries. They may be almost anyone, including yourself.

A living Trust works during your life, created by a Trust agreement. A testamentary Trust comes into existence at your death, generally created by your Will. See Where There’s a Will There’s a Waste below..

You select a Trustee to manage your Trust. Most persons select a corporate Trustee, because of its ability, continuity and reasonable cost. Some select an individual Trustee, to add a human touch. You may have one of each. There are restrictions on nonresident Trustees.

Besides dodging guardianships for minors, a Trust offers financial protection for vulnerable beneficiaries, such as the very young or old. Your Trust agreement is limited only by your imagination. You may specify investments or an investment adviser for the Trust. The popular “spendthrift provision” protects Trust property from the beneficiary’s creditors or divorcing spouse. You may offer an incentive for getting a college education. A “second chance” provision gives a beneficiary part of his share at a specified age, waiting to distribute the rest.

REVOCABLE LIVING TRUSTS

Many persons consider the revocable living Trust (RLT) the Cadillac of estate planning, and most of my clients opt for RLT’s. During your life, you are the Trustee. See REVOCABLE LIVING TRUSTS, below.

MERGING TRUSTS
I have created an improved version of the RLT, which I call a Merging RLT©. It simplifies the operation and taxation of an RLT after the Gran-tor’s death. Normally, after a client dies with an RLT, if the RLT continues it must obtain an em-ployer identification number and file its own tax return, from then on. Taxation of the trust is complex and harsh. It requires a unique account-ing system, and trusts pay higher income taxes than other taxpayer — 35% on undistributed trust income in excess of $11,150. In contrast, with my Merging RLT at the Grantor’s dies his RLT merges into the surviving spouse’s RLT. Income from its property is taxed to the surviving spouse. No EIN or trust taxation. Consult me to find out if a Merging RLT is for you.

DEATH TAXES

Wouldn’t you like to make your estate plan as easy as possible for your family? Wills and trusts designed to avoid death taxes that once applied to smaller estates are no longer needed. You no longer need to pay for a trustee or trust tax returns or put up with having to beg a trustee for what is essentially your money.

ESTATE & GIFT TAXES

Once your and your spouse’s gross estates reach a certain value, you must consider death taxes. However, as explained below, this figure is over $5,000,000 by 2016. In 2015, a federal credit offsets the federal estate tax and gift tax on at least $5,430,000. Tennessee, however, once had an inheritance tax on estates in excess of $1,000,000. In 2012, Tennessee repealed the Tennessee gift tax as of January 1, 2012. The new law phases out the Tennessee inheritance tax by 2016. The Tennessee inheritance tax exemption is $5,000,000 in 2015 and in 2016 the inheritance tax completely disappears.

AVOIDING DEATH TAXES

With the tax changes discussed above, taxes are much less of a driving force, so you can concentrate on your family. However, we can offer you strategies for reducing these taxes. One strategy is to make annual exclusion gifts, which are gift tax free on up to $14,000 per donor per donee. Certain tuition and medical costs are likewise gift tax free. Transferring property to grandchildren is tempting, but may generate a generation skipping tax.

CREDIT SHELTER TRUSTS

With a “credit shelter trust” that holds the maximum amount not subject to the estate tax for the first spouse to die, a couple can avoid the estate tax on the first to die and shelter that same amount in each estate. For example, by placing $1,000,000 in a “credit shelter trust” instead of giving it outright to the surviving spouse, that $1,000,000 is taxed in the estate of the first to die, where it generates no tax since it is under the limit. It likewise is not taxed in the surviving spouse’s estate since the SS does not receive it.

Q-TIP TRUSTS

Another type of trust is a Q-TIP  trust, specially drafted to hold property exclusively for the surviving spouse, yet dispose of the property as the first deceased spouse specifies. With an election, these trusts can either be treated as the property of the surviving spouse or as the property of the estate of the first to die.

IRREVOCABLE TRUSTS

Life insurance is an important estate planning tool, but it an estate includes proceeds from life insurance on your life that you own at your death. An irrevocable life insurance Trust is one way to avoid such estate taxes. I can work with your insurance broker. If you feel charitable and have property that would generate capital gain if sold, consider a Charitable Remainder Unitrust. The CRUT may give you more income for less taxes than any other strategy.

IN SUMMARY

Estate Planning is one of the most complex areas of the law, since it deals with state property laws and state and federal death and income taxes. Allow me to help you through the maze.

WHY ME?

Clients enjoy our  personal service. They like the fact that I am a good listener and I answer their questions. Finally, they are confident in my expertise, since I have 35 years experience and I am an Accredited Estate Planner (AEP). See http://www.naepc.org.   “He simplified and organized my estate plan and helped me understand my documents, while designing them so they are easier for my family to deal with.” Laine Agee, an AP computer teacher.

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WW 2015_12 Estates

Posted on December 10, 2001 by Wis Laughlin

My goal in helping you plan your estate is “ease and effectiveness” and that is why I favor the Revocable Living Trust as the primary document in an estate plan. It is the most flexible way to deal with unexpected health conditions like dementia, which can impair decision making, as well as helping with situations such as the management of your estate after your passing. Joint ownership by spouses might seem natural, but in the end it can often result in unfortunate consequences

An RLT offers firm flexible control you’re your property during life and thereafter. I explained to a client that my revocable living trust package includes a durable general power of attorney that works with your RLT. Set up properly, these documents pretty much assure that if you lose mental capacity, you need not endure the cost and embarrassment of a court conservatorship.

Another client worried that after his death, his spouse as Trustee might not have the background to sell his company. Tennessee law allows the client to shift certain trust responsibilities to another party, in this case, me. So, if your Uncle Ernie is trustee but not an investment whiz, you can shift investment duties to a professional investment adviser.

My Advice: Call me at (901) 507-4274 for personal advice about taking advantage of these features

My Advice: For ease and effectiveness in planning your estate, download my FREE information Estate Planning Information Package.

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Individual Year End Planning WW2016_11

Posted on November 1, 2001 by Wis Laughlin

The Holiday season is a time for giving, but we don’t have to give too much to the government, do we? You have roughly 45 days to implement tax planning strategies.
Are you lending money to the Government at zero percent interest? Stop! Here are a few strategies to lower 2016 taxes right now!

Particularly if this year will be a higher tax bracket year than next year, prepay deductible expenses in 2016 instead of 2017. Pay expected 2017 medical and dental expenses in 2016, Prepay mortgage payment or property taxes. Clean out those closets and contribute to your favorite charity. Prepay expenses of doing your job, such as pilots’ travel expenses. Pay for home improvements that qualify for home energy tax credits. Taxpayers age 70 1/2 and older can make direct gifts from their IRA to Charities:

Prepay deductible expenses.
This includes prepaying medical or dental expenses. You can deduct medical expenses only to the extent they exceed 10% of Adjusted Gross income. So pay for those braces in advance.

If this year will be a higher tax bracket year than next year, make your mortgage payment or property tax payment in December.

Employee expenses. If you have unreimbursed expenses of doing your job, you cannot deduct these except to the extent they exceed 2% of adjusted gross income. So prepay these expenses. For example, buy that laptop this year. If you are a pilot, keep records of paying visas, job-related insurance, passport & photo costs, required education and testing, logbook, electric converters, batteries, headsets, manuals, kit bag, etc. Look into Pro-Diem.

Home energy tax credits 2016 law retains some credits for energy-saving items added to your home, such as windows, insulation, roofs and doors. It stays at 10% with a $500 maximum. Any credits taken in prior years count against the $500. And many items are capped: No more than $50 for circulating fans, $150 for furnaces and $200 for windows. Solar panels qualify you for a credit for 30% of the total cost.

Divorce IRA trick. An IRA contribution is a good tax saver, and it can be made as late as the time for filing your tax return, including extensions. Did you know: An IRA contribution cannot exceed your earned income but alimony counts as income for this purpose.

Donations of clothing and household items. These donations cost you nothing and make your house more livable.

A donor-advised fund is a vehicle that allows you to make an immediately deductible contribution to a charity, from which you can recommend later grants to qualified charities. It counts as a tax-deductible donation to the organization sponsoring the fund. But you advise the organization on how to grant the money out to your favorite charities. Your donation is also invested based on your preferences. Get more information from the Community Foundation of Greater Memphis of

Gifts From Senior IRA To Charities: Seniors age 70½ and older give better. Each year they can transfer up to $100,000 from their IRAs directly to charity. It satisfies your required minimum distribution but is not added to your taxable income, so they don’t trigger phase-out’s of your itemized deductions or personal exemptions or trigger a Medicare premium surcharge. One of my clients, John, a retired banker, and his wife each make $10,000 gifts like this monthly during the year. Your broker should have forms for making such gifts.

My Advice: If you want to get the most out of year end planning ask me for my *Free ½ hour Consultation.* My Tax Mastery© planning will identify everything you can do this year.

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Estate Planning WW2016_7

Posted on July 4, 2001 by Wis Laughlin

How do I offer you “ease and effectiveness” in your Estate Planning? In over 35 years of estate planning, I have developed a three part system to make estate planning easier and less expensive. The steps are:

1. Education and decisions,
2. Planning
3. Review and sign

The process often takes a client less than two hours of meeting with me, and the estate planning documents are signed in a week. Want to know more? Read on.

First, you download my FREE Estate Planning Information Package. It teaches you about the estate planning process. It also contains a Questionnaire that helps you make many of the decisions that you must make. After reviewing the package, you are ready to ask intelligent questions.

Second, we meet, usually for an hour or less, and we discuss your planning needs. We create your estate plan. With my experience, I can help you simplify ways to meet your goals and protect your loved ones. After this meeting, I draft your estate planning documents.

Third, we meet briefly to review your documents and sign them. Your package includes a closing letter that instructs you on what to do to complete your plan. I include letters to bankers and brokers asking for their help. It is just that easy.

My Advice: Enjoy “ease and effectiveness” in your estate planning. Avoid the cost and tedium of Probate. Check out my FREE Estate Planning Information Package.

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ESTATE PLANNING WW2016_5

Posted on May 11, 2001 by Wis Laughlin

How do I offer you “ease and effectiveness” in your Estate Planning?  In over 35 years of estate planning, I have developed a system to make estate planning easier and less expensive. The process often takes a client less than three hours and is finished in a week. To elaborate:

First, I provide you with my FREE Estate Planning Information Package. My package teaches you much about the estate planning process. It also contains a Questionnaire that I designed to lead you through many of the decisions that you must make. After reviewing the package, you can make most of your decisions and are ready to ask intelligent questions.

Second, we meet, usually for an hour or less, and go over your answers and questions. We fine tune your estate plan. With my experience, I can help you simplify ways to meet your  goals and protect your loved ones.

Third, I draft your estate planning documents.

Finally, we meet, briefly to go over your documents and sign them. Your package includes a closing letter that instructs you on what to do to complete your plan. I include letters to bankers and brokers asking for their help. It is just that easy.

My Advice:  Enjoy “ease and effectiveness” in your estate planning with a revocable living trust package. Avoid the cost and tedium of Probate. Check out the FREE Estate Planning Information Package.

 

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Real estate, investment (WW2016_4)

Posted on April 19, 2001 by Wis Laughlin

teryTrader or investor? If you tend to buy and sell a number of stocks continuously and hold them briefly you are probably a “trader” or “dealer” instead of an investor.  Unlike investors, a trader doesn’t qualify for the long-term capital gain tax rate which can be half or less of your regular tax rate.

Likewise, trader” or “dealer” status can rob a real estate purchaser of capital gains treatment. There is no magic formula to avoid dealer status. To determine dealer status, the courts look at all the circumstances, including:

  • What is the taxpayer’s business?
  • Did the taxpayer buy the property to sell it?
  • Were the taxpayer’s sales “ordinary” in the course of that business?
  • How many improvements were made.
  • How long was the property held?
  • Number, frequency, and substantiality of sales
  • Efforts to sell the property.

Real estate horror story. Let me demonstrate how the hidden tax traps laid by Congress can combine to create a horror story for clients.

I represent a couple with joint incomes of roughly $250,000. They bought a Florida property for $200,000 in 1995 and rented it since then. Accumulated depreciation totaled $120,000. The property sold for $400,000 in 2015. Because of the depreciation, the gain was about $330,000, boosting their adjusted gross income to over $550,000. What would you guess was the tax effect?

They lost all of their exemptions and lost $7,000 of itemized deductions. They had an alternative minimum tax of $5,800 . They incurred a 3.8% surcharge on net investment income equal to $11,500. Their total tax was over $130,000, $74,000 higher than it would have been without the sale.

My advice: Consider an installment sale, splitting the gain into two or more years.

My advice: Year-end planning of all kinds would have been desirable, prepaying expenses, etc.

For a complete personal analysis of your taxes and a taste of Tax Mastery, E-mail: wislaughlin@gmail.com

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Individuals (WW2016_4)

Posted on April 19, 2001 by Wis Laughlin

As your tax mentor, I can teach you how to get the most tax benefits for items on your tax return. Schedule A, Itemized Deductions, allow you to deduct a number of essentially personal expenses.

Schedule A includes miscellaneous deductions (employment or investment- related expenses) but these can be deducted only to the extent they exceed 2% of your adjusted gross income. Furthermore, if you are subject to the alternative minimum tax (AMT), miscellaneous deductions and state and local taxes cease to work.

For an employee, miscellaneous deductions include union dues, professional publications, tools, supplies, uniforms, overnight travel, business auto use and more. I represent quite a few Fedex pilots, and their miscellaneous expenses include uniforms, cleaning & alterations, needed medical or other exams, reg books, AA rating, check ride exam, special eyeglasses and much more.

Key: Find enough deductions to take you past the 2% of AGI. I use experience, checklists, whatever, to find enough miscellaneous deductions.

My most powerful tool to reduce taxes is my Tax Mastery(c)  software, which I personally created. With TC I can give you a written tax plan that tells you how much you can save with each tax strategy.

Key: Once you become subject to the alternative minimum tax, additional state and local taxes and miscellaneous expenses have no effect, so shift the emphasis to charitable deductions.

My Advice: Taxpayers who also have a business (Schedule C) will generally find that allocating miscellaneous expenses to the business will better lower their taxes because the business income is subject to the self-employment tax. This is particularly true if you are subject to the AMT.

If you still have questions, it shows that you are perceptive. For a complete personal analysis of your taxes and a taste of Tax Mastery, E-mail: wislaughlin@gmail.com

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Business (WW2016_4)

Posted on April 19, 2001 by Wis Laughlin

Why should you use me as your one-stop professional? With business and law degrees plus IRS  and private practice experience, I maybe the only professional you need. Let me demonstrate.

Penny saved pound foolish. I will admit that sometimes I will work with contracts that I find on the Internet. But you shouldn’t. Why? Because my three years in law school and many years of private practice have taught me when a contract does not mean what it says. Statutes and court decisions often give unusual meaning to contract language. For example, contracts for the sales of goods by law include unwritten warranties unless you expressly exclude such warranties. Things not said in your LLC articles and agreement are controlled by statute.

My advice: If a contract has any importance for you, run it by me.

Big SUV = Big Deductions. Most autos are subject to depreciation limits. Get twice the tax impact by purchasing a big SUV (one with over 6000 gross vehicle weight). I know I have mentioned this before, but many clients are overlooking it. For such a vehicle, new law allows 50% bonus depreciation and higher ceilings for expensing. You can expense up to $25,000 of the cost and deduct half of the balance as bonus depreciation. The remainder may qualify for regular five-year depreciation. Used SUVs don’t get bonus depreciation.

For example, If your business buys a new large SUV for $65,000 and puts it in service this year. In 2016, you can expense $25,000, and you can deduct 50% of the remaining cost, $20,000, as bonus depreciation. You can deduct as regular depreciation 20% of the $20,000 balance, $4,000. If the vehicle is used 100%  for business, the first-year write-off is $49,000.

The tax break is even greater for big pickup trucks, which I will cover next issue.

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