Discussion:SUV's over 6000 pounds with Unibody Contruction

I have a client that is in the market to buy a new SUV in the next couple of months and is looking at the BMW X5 or VW Tourag.

When you refer to the many lists out there on SUV's with GVW over 6000 pounds, both vechicles are on the list. But, I recently saw somewhere that SUV's that have a unibody construction, which the BMW X5 & Tourag both have, may not be considered a "truck" in accordance with the IRS definition since they are not built on a truck chasis.

I would hate to recommend one of these vechicles to a client because it is on the list, only to find in an audit that the IRS disallows the $25K Sec. 179 expense because of the unibody construction.

Can anyone give me your thoughts or experience in this area?

Thanks.

So I guess the real question is whether the IRS really looks at this issue this way, or if CCH is just speculating. I would love to find someone who has specifically talked to the IRS about this.

Thanks.

Chassis

Thw chassis or frame of a truck is commonly constructed mainly of two beams, and several crossmembers. A truck chassis consists of two parallel straight C-shaped beams, or in some cases stepped or tapered beams, these held together by crossmembers. In most instances, gussets help attach the crossmembers to the beams. The "C-shape" of the beams has a middle vertical and longer side, and a short horizontal flange at each end; the length of the beams is variable. The chassis is usually made of steel, but can be made (whole or in part) of aluminium for a lighter weight. The integrity of the chemical composition (carbon, molybdenum, etc.) and structure of the beams is of uttermost importance to its strength, and to help prevent cracking or breaking of beams, and to help maintain rigidity and flexibility of the frame, welding, drilling and other types of modifications should not be performed by unliscenced persons. The chassis is the main structure of the truck, and the other parts attach to it. A tow bar may be found attached at one or both ends.

The truck chassis requirement was a one year aberration in the pubs. I can't recall all the details, but stay tuned; I'll look it up in the morning and post a summary.

Long and short: The conclusion was they would qualify. And the trail goes through the gas guzzler code sections. That ought to keep you interested.

It would be nice, however, if we could settle the great chassis debate once and for all.

First, let's deal with the truck chassis requirement from Rev Proc 2003-75. This allowed more generous depreciation for trucks and vans with GVWR less than 6000 lbs that would otherwise fail to qualify. It was also not to apply for any other purpose. Apparently the '03 and '04 pub 463 expanded the application to all, not just the <6000 vehicles. The 2005 and 2006 Pub. 463 deleted this. So the truck chassis requirement was a expansion of qualifying vehicles not a restriction.

The article used a Mercedes ML350 as an example. It was a five page article looking at both non-tax and tax lax based analysis. I'm not going to type the whole thing (respect the copyright at the least), but here is the summary:

1. Department of Transportation treats this as a truck.

2. Gas guzzler tax treats this as a truck (avoids the excise tax on purchase)

3. Legislative history ties gas guzzler to the luxury car limits.

4. The unibody version of the ml350 tows what the chassis version did.

5. Truck chasis requirement has been removed from the Pub 463

6. The new SUV Section 179 restrictions under the luxury car rules are tied to the gas guzzler rules.

7. Heck, it even won truck of the year from Motor Trend.

I'd recommend reading this. Here's a link to it. http://www.bradfordandcompany.com/Products/backissues.htm

The issue that first came up for me was the Nov 06 issue with this article. Personally, this is one tax letter I look forward to. And they footnote the articles to the code and regs.