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Why Buy?

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  • Posted on 23rd Sep, 2022 04:42 AM
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This story appears in the September 1999 issue of Business Start-Ups magazine.

Y2K model cars speed into showrooms this month, sparking aburning question: Should you buy or lease your business car? may be the more affordable avenue, but it leaves you withnothing at lease-end. Tax implications may help you determine whichalternative is best.

If you buy a car and use it for business purposes, you mayrecover part of its cost through annual . The amount,however, depends on the method of depreciation used, the cost ofthe car, the year it's placed in service and the percentage oftotal mileage that's for business. For cars used more than halfthe time for business, an alternative to the common deduction (theModified Accelerated Cost Recovery System, or MACRS) is theexpensing deduction (Section 179 of the Internal Revenue Code),which replaces depreciation the , according to theAmerican Institute of Certified Public Accountants (AICPA). Anypart of the cost not recovered through first-year expensingcan be recovered through depreciation deductions in subsequentyears, the AICPA notes.

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