Self employed? Go get that BIG TRUCK/SUV!

[wandonono]

There is a little known (to me, anyway) tax loophole that gives huge tax deductions for large vehicle purchases. check this link: TAX BREAK

 

[Squalish2357]

It's ripping off taxpayer money, but it's an irrisistible deal for those who own a business.

 

[spanky]

interesting

 

[emaij]

Wow is this country out of it.

 

[GetReal]

Nothing spells audit for the IRS more than an accelerated vehicle depreciation under a section 31 expense. AUDIT GUARANTEED.:|

 

[MyBuds]

The Wall Street Journal has had articles on this topic in the past. If you qualify for this tax break, go for it. It isnt hard to qualify. I know doctors who have legally used this loophole to deduct their MLs that they use to travel from the office to the hospital. You CANNOT deduct a car used for commuting though, so if you are traveling from home to work, this obviously would not apply to you. Also, you need to have income to deduct against, but that is implied as well. Good post for those unfamiliar with tax deductions.

 

[bmacd]

awesome...wish i had my own small business

-=bmacd=-

 

[flot]

This seems like a great deal for those in the real estate biz - that's one example at least of a profession where you'd legitimately use a vehicle almost solely for business transportation. (aside from delivery trucks or farm vehicles). Since they mentioned the Durango, I looked it up - $24,000 will buy you a 2002 or you could probably get a 2002 for about $26,000. So you could buy an 02 durango this week, write the entire purchase price off against your business income, and get an ~$8000 check back from the IRS whenever you file your taxes. Classic.

 

[MyBuds]

It actually works better on more expensive suvs. currently you can write off up to $24,000 as accelerated depreciation, then depreciate the rest using something like straightline(book value-salvage value)/years. if you use accelerated depreciation and deduct 24,000 on a 26,000 car, odds are you will end up paying the IRS in the end when you sell the suv above the depreciated (book) value. i'm still only a student, but this is my understanding.

edit: said car, meant truck/suv. works for vehicles 6000+ pounds, so mid to large sizepickups and suvs.

 

[CPA]

A Section 179 expense is nothing new and is not a loophole.

 

[CPA]

Originally posted by: MyBuds
It actually works better on more expensive cars. currently you can write off up to $24,000 as accelerated depreciation, then depreciate the rest using something like straightline(book value-salvage value)/years. if you use accelerated depreciation and deduct 24,000 on a 26,000 car, odds are you will end up paying the IRS in the end when you sell the car above the depreciated (book) value. i'm still only a student, but this is my understanding.

A car doesn't count because it is not in the light truck category.

 

[lundog22]

Yes, I knew about this awhile back. This is one big loop hole the IRS has to fix. I am not happy about paying parts of other's big non eco. friendly SUVs....

 

[JameyF]

Well consider this. First, it is an attempt to lower fuel consumption by using smaller vehicles. If the company I work for knew this, we would have purchased a 30,000 van last year and this year. Instead, we fixed the ones we had, and we have no plans for purchasing in the near future. We have 5 vans with over 200,000 miles each on them. With the economy like it is, we are afraid to put money out there in fear that the vans won't pay for themselves. To be able to get some of the depreciation that we will get anyway up front, it will lower our risk in buying them. Considering the government's interest rate to borrow this money that will be paid in advance, the amount the taxpayer is out directly is very low. Indirectly, the taxpayer wins, and wins, and wins, and wins.

1) Wins because taxes are paid on the purchases of vehicles. Property taxes are paid on vehicles.

2) The dealership makes money and pays taxes on that money as well as all there suppliers, and their suppliers, etc.

3) People who work at these locations are able to work and pay taxes instead of collecting unemployeement checks.

4) Environmentally, it's great to upgrade older fleets with smaller (intended result) or at least newer vehicles that may have to meet tougher emission standards (probably not on these due to truck classification) or use less fuel.

I own my own corporation, but I wouldn't use this loop hole for my personal corporation. You should be able to easily prove you use the vehicle at least a majority of the time for a business, and that it is a type that would be useful. This is something that raises red flags in the audit department of the IRS. My father was audited once. He says the first thing they asked was what do you drive and how is it listed.

 

[Kevin]

Now, shouldn't these SUVs be registered as Commercial vehicles since they are owned by a business and not an individual?

 

[Cybordolphin]

Funny how this stuff makes headlines... right before oil prices are about to go through the roof. Its also funny how much control the big auto manufacturing companies have on the politicians. Hey... after all.... no one wants abandoned SUV's left for dead along the sides of our highways.... cause no one can afford to fuel them. I say we go ahead and bail em out.

And hold on to your shorts (or wallet), cause the price of oil once it does skyrocket... ain't comin down.

 

[Mallow]

hehe, saw this on dateline last week

 

[ChrisCramer247]

Originally posted by: GetReal
Nothing spells audit for the IRS more than an accelerated vehicle depreciation under a section 31 expense. AUDIT GUARANTEED.:|

Or double declining method .

Audits != Fun

 

[Stifko]

so if you do this, your probably gonna get audited?

 

[ChrisCramer247]

Originally posted by: Stifko
so if you do this, your probably gonna get audited?

Your small business will, and your personal finances will as well if the auditors claim that it is a personal car. So a two for one.

Let's say monthly your small business makes $100,000 and you have been in business for a while now. Your average write off is around $10,000 Now if the IRS or your accountant see's a personal vehicle with a personal purchase on it that is obviously not a company truck/car for $45,000 as a write off that should be a big red flag. So now your writeoff is $55,000 instead of your regular fluctuation around 10k.

You most likely could prove that it is a "company car" with pictures of clients in it or you making detail driving lists of where you go for company travels. The hard part is the audit. The audit is horrid. You have to show every personal and busniess finances and books. And if you don't have one they drill you, and if they think you are lying or that you are hiding, they will suqesture(sp?) you to DC and go before a panel. They can even make it a panel audit in your local town as well.

So the hard part really isn't proving that the car is a company car, it's actually going through the audi. To me an audit is not worth the write off . I had my personal statement audited once, horrible horrible horrible experience. In the long run I got even more money back (like $200 not a big deal) but the audit took close to 2 months.

 

[puppyfriend]

Audits are very YMMV. I was audited once. It only took about an hour of my time stretched out over a couple of days. It turns out I made a mistake and they just wanted me to pay the difference with interest. I've had worse experiences getting a $5 rebate from Best Buy.

David

 

[WileCoyote]

combine with 2003 Ford Expedition test drive offer $75 for even hotter deal

=)


[fixed link]

 

[JameyF]

Originally posted by: ChrisCramer247

Originally posted by: Stifko
so if you do this, your probably gonna get audited?

Your small business will, and your personal finances will as well if the auditors claim that it is a personal car. So a two for one.

Let's say monthly your small business makes $100,000 and you have been in business for a while now. Your average write off is around $10,000 Now if the IRS or your accountant see's a personal vehicle with a personal purchase on it that is obviously not a company truck/car for $45,000 as a write off that should be a big red flag. So now your writeoff is $55,000 instead of your regular fluctuation around 10k.

You most likely could prove that it is a "company car" with pictures of clients in it or you making detail driving lists of where you go for company travels. The hard part is the audit. The audit is horrid. You have to show every personal and busniess finances and books. And if you don't have one they drill you, and if they think you are lying or that you are hiding, they will suqesture(sp?) you to DC and go before a panel. They can even make it a panel audit in your local town as well.

So the hard part really isn't proving that the car is a company car, it's actually going through the audi. To me an audit is not worth the write off . I had my personal statement audited once, horrible horrible horrible experience. In the long run I got even more money back (like $200 not a big deal) but the audit took close to 2 months.

Sorry for the long quote, but there is much to comment on. First, a "two for one" as you put it...that is one instance where that isn't a hot deal.

Next, I agree the audit is worse than proving it is a company car....That is unless you can't prove it. That's why I commented earlier I wouldn't do it unless it was easy to prove.

Last, it is disgusting that there are thousands if not hundreds of thousands of taxpayers like you who are overpaying BY CHOICE, just to reduce the threat of the IRS auditing their books. I am included in this group. I am 32 years old, and I know for a fact I have OVERPAID every single year since my first tax return after I got a full time job. Once I left the filing as a part-time dependent on the EZ form, things that I didn't know about, or things that I didn't fully understand weren't deducted as allowable by law. I also, have refused to deduct legitimate expenses because of fear of being audited. I would expect over the last 3 years I have overpaid by 2-3 thousand dollars on federal alone. I think am going to go back and have them professionally done to get some of the money back, but that will cost hundreds. I would fully support some form of tax simplification like a flat tax or sales tax, but that isn't going to happen. Those congressmen in DC love to tell you what you should be doing with your money (buy a house, have a kid, contribute to certain charities).

 

[TekDemon]

Originally posted by: JameyF
Well consider this. First, it is an attempt to lower fuel consumption by using smaller vehicles. If the company I work for knew this, we would have purchased a 30,000 van last year and this year. Instead, we fixed the ones we had, and we have no plans for purchasing in the near future. We have 5 vans with over 200,000 miles each on them. With the economy like it is, we are afraid to put money out there in fear that the vans won't pay for themselves. To be able to get some of the depreciation that we will get anyway up front, it will lower our risk in buying them. Considering the government's interest rate to borrow this money that will be paid in advance, the amount the taxpayer is out directly is very low. Indirectly, the taxpayer wins, and wins, and wins, and wins.

1) Wins because taxes are paid on the purchases of vehicles. Property taxes are paid on vehicles.

2) The dealership makes money and pays taxes on that money as well as all there suppliers, and their suppliers, etc.

3) People who work at these locations are able to work and pay taxes instead of collecting unemployeement checks.

4) Environmentally, it's great to upgrade older fleets with smaller (intended result) or at least newer vehicles that may have to meet tougher emission standards (probably not on these due to truck classification) or use less fuel.

I own my own corporation, but I wouldn't use this loop hole for my personal corporation. You should be able to easily prove you use the vehicle at least a majority of the time for a business, and that it is a type that would be useful. This is something that raises red flags in the audit department of the IRS. My father was audited once. He says the first thing they asked was what do you drive and how is it listed.

The deal on the Durango looks sweet if you want to drive it into the ground and just never sell it =P or heck, get liability only insurance after 4 years and crash the thing then junk it...of course you'd have to do it without killing yourself lol.

 

[LuNoTiCK]

I want my parents to do this deal, but I don't know if it's worth the trouble of getting audited. Besides, how would you prove it's a company car if they honestly dont use it, maybe to bring packages to UPS but I can't think of anything else.

 

[wandonono]

Does anyone know for a FACT that this would trigger an audit?