Are there recapture rules if a truck over 14,000 pounds, depreciated using Section 179, is sold or put to personal use within a few years?
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Yes, there are recapture rules that apply if a truck over 14,000 pounds, which was depreciated using Section 179, is sold or converted to personal use within a few years.
1. Section 179 Recapture on Sale or Change in Use
Section 179 property includes tangible personal property (such as trucks) used in a trade or business and for which the taxpayer elected to expense the cost under Section 179. If, during the recovery period (the period over which the property would otherwise be depreciated), the property is sold, exchanged, or converted to personal use, recapture rules apply.
a. Sale of the Truck
When you sell Section 179 property, any gain on the disposition is subject to recapture as ordinary income to the extent of the Section 179 deduction and any depreciation previously claimed. This is governed by IRC §1245. The amount recaptured as ordinary income is the lesser of:- The depreciation (including Section 179 deduction) allowed or allowable, or- The gain realized on the disposition.
This means that if you sell the truck for more than its adjusted basis (cost minus Section 179 and any other depreciation), the amount up to the total depreciation (including Section 179) is recaptured as ordinary income. Any gain above that is treated as Section 1231 gain (potentially capital gain).
b. Conversion to Personal Use
If, in any year during the recovery period, the business use of the truck drops to 50% or less, you must recapture as ordinary income the excess of the Section 179 deduction over the depreciation that would have been allowable had Section 179 not been claimed. This is reported as ordinary income in the year the business use drops.
The recapture amount is calculated as follows:- Figure the depreciation that would have been allowable on the Section 179 amount using the regular depreciation method (MACRS) from the year the property was placed in service through the year of recapture.- Subtract this amount from the Section 179 deduction claimed.- The difference is recaptured as ordinary income.
You must also increase the basis of the property by the recapture amount.
2. Special Considerations for Trucks Over 14,000 Pounds
The Section 179 deduction for SUVs and certain vehicles is capped (for 2025, the cap is $31,300 for SUVs between 6,000 and 14,000 pounds), but this cap does not apply to vehicles with a gross vehicle weight rating (GVWR) over 14,000 pounds. Thus, a truck over 14,000 pounds is not subject to the SUV cap and can be fully expensed under Section 179, subject to the overall Section 179 limits.
However, the recapture rules described above still apply regardless of the vehicle's weight.
3. Reporting Recapture
- If the business use drops to 50% or less, report the recapture amount as ordinary income on Form 4797, Part IV.
- If the property is sold, report the recapture as ordinary income on Form 4797, Part III, as required by Section 1245.
4. Example
Suppose you purchased a truck (over 14,000 pounds GVWR) for $80,000 and claimed a $80,000 Section 179 deduction. Three years later, you sell the truck for $30,000. The adjusted basis is $0 (since the full cost was expensed). The entire $30,000 is recaptured as ordinary income under Section 1245, because it does not exceed the total depreciation (Section 179) claimed.
If, instead, you kept the truck but started using it for personal purposes (business use drops to 40%), you would recalculate what the depreciation would have been under MACRS for those three years, subtract that from the $80,000 Section 179 deduction, and recapture the difference as ordinary income.
In summary: Yes, recapture rules apply if a truck over 14,000 pounds, depreciated using Section 179, is sold or put to personal use within a few years. On sale, the gain up to the amount of Section 179 and depreciation claimed is recaptured as ordinary income under Section 1245. If business use drops to 50% or less, the excess of the Section 179 deduction over allowable depreciation is recaptured as ordinary income. These rules apply regardless of the truck’s weight, though the Section 179 deduction cap for SUVs does not apply to vehicles over 14,000 pounds.
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