How American entrepreneurs use the G‑Wagen as a giant tax write‑off

Did you know that some American entrepreneurs use the purchase of a Mercedes G‑Wagen as a giant tax write‑off thanks to a little-known loophole in the US tax code?

Let us introduce you to Congress’s Small Business Jobs Act, designed to help small businesses recover from the financial crisis of 2008 with tax breaks on essential equipment used for work.

Section 179 of the IRS’ Publication 946 basically deals with all the big equipment that small businesses need, like a farmer needing a tractor, a trucking company needing a new trailer…or an entrepreneur needing a G-Wagen?

It seems like a shady business practice, but actually, Section 179 means that a lot of small businesses, i.e, entrepreneurs, are eligible for a tax break if they use their G-Wagen for business half the time.

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American entrepreneurs and the G‑Wagen tax write‑off

It seems that more and more small businesses and entrepreneurs have a Mercedes G-Wagen in their car collection, and it turns out that this is no coincidence or trend.

Thanks to the Financial Crisis of 2008, in late 2010, Congress passed the Small Business Act, which aimed to help small businesses with lending programmes, increased borrowing limits, and tax cuts on essential equipment.

‘Essential’ is the important word here, as it means when it’s combined with Section 179 of the IRS’ Publication 946, that’s where the G-Wagen loophole comes in.

For people like farmers, it means they can receive tax breaks on their tractors, or kitchen equipment for chefs, or construction materials for builders. However, there’s a bit of a gray area when it comes to road-based vehicles.

50 percent work, 50 percent play

A road vehicle is eligible for a tax write‑off like other big business purchases if it is used at least 50 percent for business and has a Gross Vehicle Weight Rating of between 6000-14,000lbs.

When the Act first came in, it only really included heavy-duty trucks.

But people realized quickly that if you buy a Mercedes G‑Wagen and use it for business 50 percent of the time, then you can add it to your tax write-offs because they’re so heavy.

A lot of cars are heavier than ever and are weighed down with some nice luxury features, which means that people can take advantage of Section 179 more than ever.

A lot of American entrepreneurs have the IRS to thank for their super luxurious G-Wagen, who knew?

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