Thursday, May 14, 2009


Can the deduction be claimed for more than one vehicle?


Connie, this is a very good question. Your question only goes to prove just how complicated the tax code is. Here is the best that I can do.

The Code and legislative history are not clear on this. The deduction is allowed for “qualified motor vehicle taxes.” This term means “any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle.” One could argue that the use of “a” as opposed to “any” or “one or more” suggests that the deduction is allowed only with respect to one vehicle. The dollar limitation seems to confirm this in that it too uses “a” in its language. Specifically, it says that “[t]he amount of any State or local sales or excise tax imposed on the purchase of a qualified motor vehicle...shall not exceed the portion of such tax attributable to so much of the purchase price as does not exceed $49,500.”

On the other hand, one could argue that “a” being an indefinite article (according to my old English teacher Miss Kolar) shouldn't be interpreted as “one.” But if the deduction were available for two (or more vehicles), the $49,500 limitation would produce an anomalous result—an individual buying two cars each costing $49,500 could deduct the taxes on both whereas another individual buying one car costing $99,000 could only deduct the tax on the first $49,500. Thus, the better view seems to be that the deduction is limited to the tax on one qualified motor vehicle subject to the applicable limitations.

But IRS guidance will have to resolve the matter. I will let you know if they figure out what the word "a" means.

Larry Kopsa CPA