Rivians are all the rage in L.A. — and the influx of the electric trucks and SUVs has put a spotlight on an old IRS provision as people casually brag over lunch about claiming them as farm vehicles for the tax benefits.
When it was enacted in 1958, Section 179 was aimed at trucks with a gross vehicle weight rating of over 6,000 pounds that are used for business — such as commercial vans, work-
outfitted pickup trucks and farm equipment — but what the IRS didn’t see coming was the crop of oversized personal vehicles that hit the road in the early aughts and met the weight standard, like a luxurious 2001 Range Rover weighing in at 6,130 pounds.
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Keen-eyed CPAs started classifying these luxury SUVs as business vehicles and taking deductions on the depreciation. If they played the tax filings correctly, there were a whole slew of extra bonus depreciation deductions that were as outsized as a Hummer EV.
Fast-forward to 2023, and a new crop of enormous electric vehicles — including the trendy Rivian R1T Pickup truck, which tips the scale at 7,173 pounds — is starting to see a similar frenzy with hopeful Section 179 deductions.
Irvine-based Rivian has been ramping up production to meet the demand, delivering 15,564 R1T pickup trucks (starting at $73,000) and R1S SUVs ($78,000 and up) to customers in the third quarter of this year. So, no, your eyes are not deceiving you if you’re suddenly seeing them everywhere in L.A.
As hip new EVs like the Rivian came to market, a melange of social media money influencers started talking about a hot tip they “recently discovered” — with a proper tax strategy, these six-figure EVs become magically free. Which, of course, is pure hyperbolic clickbait.
Because of the social stir, the actual professionals are having to bring their clients back to earth. Business manager Jason Schneider only half jokingly says, “TikTok ‘financial experts,’ please stop trying to convince my clients that luxury SUVs are great investments because of bonus depreciation rules!”
While Section 179 is a very real deduction when used as intended, numerous business managers say off the record that they would never take the deduction for their non-farming clients because it’s a red flag for an audit.
“I think it’s bullshit.” says Matt Farah, host of the popular Smoking Tire podcast and founder of Westside Collector Car Storage, who objects to the deduction on moral grounds because of the climate crisis. “It’s ridiculous that people are perverting the law and the deduction,” he says, adding that incentivizing “giant electric SUVs and luxury cars not being used for work of any kind” is environmentally and ethically dubious. He adds, “Also, it’s totally shady, and, if you are audited, you are screwed.”
This story first appeared in the Oct. 25 issue of The Hollywood Reporter magazine. Click here to subscribe.
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