Discussion:Last Chance: Motor Home & 179

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Discussion Forum Index --> Tax Questions --> Last Chance: Motor Home & 179


Mtmckeecpa (talk|edits) said:

16 June 2006
1) What is the class life for a Motor Home/RV?

2) ASSUMING used in a trade or business, is 179 available for a motor home/RV?

Mtmckeecpa (talk|edits) said:

19 June 2006
Come on, Tax Almanac sharp shooters...start shootin'

1) I can't find a specific class, so buses 00.23, or Heavy Duty Trucks .00242, MACRS of 5 years.

2) Motor Home is considered Listed Property.

3) S Corp client is a marine and boat consultant with clients in Virginia and Florida that wants to purchase a motor home and take 179. No problem with income in S Corp, motor home $200k.

4) Is the mobile home considered transportation or lodging?

The only current reference I can find is Robert D. Shirely, TC Memo 2004-188. Here the court ruled for the petitioners. The petitioners owned a Motor Home sale and rental business. The court ultimately looked at "substitute property" (rental cars, hotel lodging)to determine whether or not the motor home would qualify for the 179 deduction. The court reasoned that the substitute property would qualify for 179, therefore so should the motor home.

5) In my case the motor home would be used for both travel and sleeping/cooking accomodations for business travel. It also would have similar "substitute property" involved rental cars. hotels...

6) Aside from the above or in addition to it, if personal use IS involved will the rules under 280A limit the deductions and result in additional W-2 comp to the shareholder?

Feedback, please...

Mtmckeecpa (talk|edits) said:

27 June 2006
About a week ago I posted a couple of questons about motor homes (RVs) and whether or not a 179 deduction was available. Had no reponses...

I could only find one court case (Robert D. Shirley, TC Memo 2004-188) about taking the 179 on a motor home...taxpayer prevailed becuase they were in the business of renting and selling motor homes, etc...

Has anyone taken IRC 179 or reg depreciation on a motor home (RV) used in a trade or business other than a motor home rental business? Maybe used as a business vehicle or taken a portion of a motor home under some other theory?

If you have an opinion and you don't want to post it here contact me offsite. Thanks.

Warren (talk|edits) said:

27 June 2006
As long as it is used in the business 100% and it's ordinary and necessary for the type of business, I would say that it could be expensed under IRC 179. It doesn't even fall under definition of SUV so it wouldnt be limited by the $25k limit. The IRS auditor would challenge it under audit I would think but if it is ordinary and necessary in that type of business and it is actually used 100% for business I would think that you could support it. Keep good mileage and usage records!!

Dennis (talk|edits) said:

27 June 2006
Problem, however, is what do you do if it's 60%?

Mtmckeecpa (talk|edits) said:

28 June 2006
Warren & Dennis,

Thank you for the response!

What I am trying to get my arms around is that the motor home can be used simultaneously for transportation and lodging. Is the 179 available IF the taxpayer also uses for lodging? (Under Shirley, the court said that 179 was available because any "substitute" property would qualify for 179, i.e., rental car and overnight lodging in a hotel/motel).

S corp client whose 100% shareholder wants to use as a buseinss vehicle AND as a place to stay in lieu of motels when on the road for business.

I agree squeaky clean records is a must...

What if the useage is only 60%? I think less than 100% and there is a problem with 179, 280A and personal use...(see Perry v. Comr., TC Memo 1996-194).

Again, thanks for your earlier comments.

JR1 (talk|edits) said:

28 June 2006
Is this any different than the over the road truck cabs? The driver lives there...I'd think the application would be the same.

Warren (talk|edits) said:

28 June 2006
Just because he uses it for lodging doesn't make it real estate. It is still a piece of business equipment and IRC 179 is allowable. As I said earlier though, I would be sure that there are spotless records on usage. Where driven, fuel purchase receipts that match the "where driven" records, mileage, odometer readings, purpose of trip, clients seen, etc. I'm sure in an audit setting, IRS auditor would try to disallow some or all of a motor home deduction.

JR1 (talk|edits) said:

28 June 2006
Definitely. The agent is coming after this, figuring that by definition, there's personal enjoyment going on and will attempt to disqualify. I wonder about the race teams that travel around in motor homes. Music groups. John Madden. Gotta be some case law somewhere since those high profile folks would get whacked the most of any.

Mtmckeecpa (talk|edits) said:

28 June 2006
In Shirley (case above) the IRS went after the lodging component to disallow the 179 but lost. I think it helped that the taxpayer was in the sales and rental of motor homes.

I wondered too, JR1, about the music groups, race car folks, (although I don't have any client in Multi level marketing, I understood that many own, the real succesful ones, anyway, RVs to travel and promote the MLM business), etc...

I have searched high and low for some case law but only found the two cases that I cited, Shirely (prevailed) and Perry (lost).

We are talking a big number too, the RV will cost about $200k...so I want to be absolutely certain that all the t's are crossed and i's dotted down to a gnat's eyebrow.

Again, thanks for the feedback any additional thoughts I would appreciate too, so keep it coming!

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