The good news is that you have received a generous grant from California to replace your old truck with a clean Near-Zero truck. As you celebrate your good fortune, your bookkeeper asks if you have to pay tax on the grant. Another provision of the new federal tax law allows trucks purchased prior to 2023 and used in a trade or business to be expensed 100% of the cost basis in the year the truck is placed in service. Transportation equipment is specifically called out as qualified equipment.
Assume the new Near-Zero truck cost basis is $170,000 and you have a $100,000 Prop 1B grant. The truck cost basis of $170,000 more than offsets the $100,000 grant income, leaving $70,000 of additional tax benefit that further reduces your income tax. More >>
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