Here is how I understood it with my 2003 H2:

In FY 2003 (April 04 taxes) under IRS Section 179 if you owned a business (Sub S - Corp -LLC -Sole Propr) that was your primary source of income (not a second income source) you could deduct 100% of the Hummer H2 (because of vehicle weight not company vehicle use) as machinery (H1 up to $100K). This one-time loop hole was closed in FY 2004 by congressional action.

Now under IRS Section 179 you can deduct a H2 (plus a few other vehicles that qualify by weight) up to 100% if you can show 100% use (by good documention) of the vehicle for strict and only business use. It is now a "Business Vehicle" by use and not the one-time "machinery" as it was for 2003.

I am not a CPA, but just went through this with an IRS Agent during an audit. The Agent tried to ding my 100% deduction under Section 179 (2003) because I did not have excellent documention (mileage logs - places and events) to show him I used it as a strict business vehicle 100% of the time.

But since I had placed it into service as a business owner in 2003 (purchased in Dec 2002 - delivered in Jan 2003) and it weighed over 7000 lbs, along with the one-time 2003 Section 179 wording; I told him it was a "machinery" purchase to my business and therefore did not need to document useage for business purpose in order to deduct.

Result - 100% deduction (as originally filed) of my 2003 H2 under Section 179. Please understand that this one-time loop hole is no more. But you still can deduct a H2 under Section 179 as a business vehicle in a primary business (not part-time).

Consult you CPA - Good Luck