The money ($$$) side of the GT3 purchase
07-28-2013, 08:37 PM
#16
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4 door luxury cars, even AMG's are vastly different to the IRS than a track oriented car like a GT3 and 458, gallardo, etc. You can put clients in 4 doors for business but very hard to believe for a track car. If you want to risk it go ahead, but as you have evidenced in recent months the IRS is the most powerful entity in the government and will make your life difficult forever and ensure you get repeatedly audited. Everyone including you have various risk tolerances, mine is just a lot lower, I like living clean and sleeping well at night.
If the only way you can buy it is to be creative with the IRS, I say you shouldn't be buying it. There are legal ways to lessen the burden which are long accepted.
He asked the question, I gave me educated opinion.
If the only way you can buy it is to be creative with the IRS, I say you shouldn't be buying it. There are legal ways to lessen the burden which are long accepted.
He asked the question, I gave me educated opinion.
and have a great Sunday!We will let frayed's accountant "test" his vehicle usage and application against what the IRS allows. If he gets a Green light then he can proceed and if he does not then he won't...All I am saying is that IRS is very clear about this and frayed will NOT be the only person in this country that has legally and ethically charged a SPORTS car against his company if he met the IRS code called (Business use of car).
And I am sure that you read my original post, and I tried to state clearly my position about being ethical and legal and following the code, etc...I like and need my sleep too!
And with all due respect and for your information only, horsepower, power to weight ratio, PCCB vs. Steel brakes, 2 or 3 or 4 door, or carbon roof, or sporty appearance or not are NOT specified. (Back seat or no back seat are also I am pretty sure not specified, but this one I cannot remember). There are clear limits clearly specified and methods for depreciation, cost as a percentage of gross income, etc...
All you need to do is to have a good CPA to run the litmus test, and depending on the business that frayed is in, and how he uses the vehicle, etc. make an honest decision. And for sure, there are trade-offs since you need to track usage, etc and frayed may have to decide that...
If you are following the IRS code, and your accountant is competent and supports the vehicle usage, not sure why you are scared of being audited and that IRS is the most powerful organization or not?
No more comments from me on this topic! Peace!
Best of luck!
07-28-2013, 08:41 PM
#17
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FWIW, the type of car is not a concern under the IRS code. If you use it for business the business expenses are deductible. HOWEVER, with lease payments there are limitations as to how much of the lease payment can be deducted depending on the FMV of the car.
If you buy the car you still can deduct most business related expenses including insurance, gas, maintenance and so on. Also, you get yearly depreciation but that is also severely restricted especially with expensive cars.
If you buy the car you still can deduct most business related expenses including insurance, gas, maintenance and so on. Also, you get yearly depreciation but that is also severely restricted especially with expensive cars.
07-28-2013, 10:57 PM
#18
Race Car
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Thanks guys.
Good posts. Income while solid not 'rich' or else I'd have the resources to move everything into entirely tax sheltered vehicles and offshore accounts. Thought this article interesting. Despite strong revenue still playing by the rules of common folk.
http://www2.ucsc.edu/whorulesamerica...t_manager.html
Good posts. Income while solid not 'rich' or else I'd have the resources to move everything into entirely tax sheltered vehicles and offshore accounts. Thought this article interesting. Despite strong revenue still playing by the rules of common folk.
http://www2.ucsc.edu/whorulesamerica...t_manager.html
07-28-2013, 11:00 PM
#19
GT3 player par excellence
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visiting clients in gt3 is hard to explain away if I were auditing u. and based on that, I would go over ur books with much finer comb. I don't lease thru company.
like u, I paid $, but in today's environment, I question the use of cash. borrow then pk the same amount on just about anything u will beat the car loan rate.
like u, I paid $, but in today's environment, I question the use of cash. borrow then pk the same amount on just about anything u will beat the car loan rate.
07-29-2013, 02:10 AM
#21
There is another way...... You can buy your car with cash and still enjoy some tax benefits as long as you drive it for legitimate business uses. You can claim 56.5 cents per business mile driven...as long as you document the miles. If you drive 1,000 business miles in a year, regardless of what car you drive, your business can expense $565 dollars and you get this money personally without reporting it as income.
It's not a lot but it's very clear cut!
http://www.irs.gov/uac/2013-Standard...cal-and-Moving
It's not a lot but it's very clear cut!
http://www.irs.gov/uac/2013-Standard...cal-and-Moving
07-29-2013, 05:06 PM
#22
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I asked him about running the GT3 through the firm, telling him that my prior accountant simply said 'no'. He stated he was embarrassed that a CPA would be so dismissive, embarrassed that a licensed professional would advise as such. He explained that there are clear ways that the company can incur part of the cost of the car. It all boils down to allocation of % of usage to business v. personal and getting those numbers right.he business
I've never leased a vehicle before, but understand that one can actually set the residual to be quite low, and increase the lease payments accordingly.
So my thought is this: lease the car through the business with a low residual/high monthly over 3 or 4 years and have tessentially 'buy' 60% (or whatever the % should be based on my usage) of the vehicle for me.
Thoughts?
I've never leased a vehicle before, but understand that one can actually set the residual to be quite low, and increase the lease payments accordingly.
So my thought is this: lease the car through the business with a low residual/high monthly over 3 or 4 years and have tessentially 'buy' 60% (or whatever the % should be based on my usage) of the vehicle for me.
Thoughts?
I am a business owner, and my CPA has always encouraged me to lease vehicles, regardless of type. There is no rule that the vehicle must have 4 seats, be boring, etc. Besides, the IRS does not know what model you are leasing, so it is not possible for the GT3 itself to be a red flag.
That said, I would probably not lease if I was planning to keep the car beyond the lease period, as money factors (interest) on leases are in the 5-6% range, vs. 1.5-2% for loans. And because a big draw to leasing (at least in CA) is that you only pay sales tax on the lease payments; if you buy it at the end, you pay sales tax on the lease payments (including on the interest), and on the residual.
07-29-2013, 06:23 PM
#23
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Thanks Alan. There are some weird options for sales tax here from what I understand. Certain programs allow ways around sales tax IIRC. But yeah, higher interest rates on leases are off putting.
As for residuals, that must have been the way around it. I know there are folks who have gone through 4 year leases and ended up with a 30k buyout on Porsche Cayenne Turbo S. That sort of thing.
Gonna have my CPA run all the number and counsel me on risks.
As for residuals, that must have been the way around it. I know there are folks who have gone through 4 year leases and ended up with a 30k buyout on Porsche Cayenne Turbo S. That sort of thing.
Gonna have my CPA run all the number and counsel me on risks.
08-01-2013, 08:53 PM
#24
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I have been in public accounting since 1980 and have my own firm. It is difficult to go over all of the nuances here. Sometimes leasing money factors make sense, sometimes not. If it is almost free money then why not lease. There are operating and capital leases. All leases are still subject to percentage business use, or at a minimum there must be a personal use W-2 amount that is charged back to you as personal use. There is some leeway in how the personal use value is calulated. As far as how the GT3 is listed on the return, you do not have to put "GT3 TWO DOOR COME AUDIT ME" in neon lights. You can list it as a business auto and make the IRS ask upon audit what type of car it is.
I guarantee I can justify the 25 miles per gallon my client gets in his GT3 traveling to visit clients or going to meetings. My clients take their trucks or four doors if they are taking clients with them or going to lunch. G-Wagons, S - Class, get much worse mileage and some cost more. The key here is documentation and do not get greedy.
I guarantee I can justify the 25 miles per gallon my client gets in his GT3 traveling to visit clients or going to meetings. My clients take their trucks or four doors if they are taking clients with them or going to lunch. G-Wagons, S - Class, get much worse mileage and some cost more. The key here is documentation and do not get greedy.
08-02-2013, 12:07 PM
#26
visiting clients in gt3 is hard to explain away if I were auditing u. and based on that, I would go over ur books with much finer comb. I don't lease thru company.
like u, I paid $, but in today's environment, I question the use of cash. borrow then pk the same amount on just about anything u will beat the car loan rate.
like u, I paid $, but in today's environment, I question the use of cash. borrow then pk the same amount on just about anything u will beat the car loan rate.
08-02-2013, 12:33 PM
#27
I've generally been a cash buyer or in a position to buy cash with my toy purchases. I also own my own business. I also travel all over texas, oftentimes by car, on business.
Well, I switched accountants b/c my old accountant was far too conservative and he got some very basic items wrong wrt to taxes. My new accountant handles quite a few law firms, medical practices, restaurants, and is aggressive but balanced and has a good understanding where the tax boundaries lie.
I asked him about running the GT3 through the firm, telling him that my prior accountant simply said 'no'. He stated he was embarrassed that a CPA would be so dismissive, embarrassed that a licensed professional would advise as such. He explained that there are clear ways that the company can incur part of the cost of the car. It all boils down to allocation of % of usage to business v. personal and getting those numbers right.
I've never leased a vehicle before, but understand that one can actually set the residual to be quite low, and increase the lease payments accordingly.
So my thought is this: lease the car through the business with a low residual/high monthly over 3 or 4 years and have the business essentially 'buy' 60% (or whatever the % should be based on my usage) of the vehicle for me.
Thoughts?
Well, I switched accountants b/c my old accountant was far too conservative and he got some very basic items wrong wrt to taxes. My new accountant handles quite a few law firms, medical practices, restaurants, and is aggressive but balanced and has a good understanding where the tax boundaries lie.
I asked him about running the GT3 through the firm, telling him that my prior accountant simply said 'no'. He stated he was embarrassed that a CPA would be so dismissive, embarrassed that a licensed professional would advise as such. He explained that there are clear ways that the company can incur part of the cost of the car. It all boils down to allocation of % of usage to business v. personal and getting those numbers right.
I've never leased a vehicle before, but understand that one can actually set the residual to be quite low, and increase the lease payments accordingly.
So my thought is this: lease the car through the business with a low residual/high monthly over 3 or 4 years and have the business essentially 'buy' 60% (or whatever the % should be based on my usage) of the vehicle for me.
Thoughts?
There HAS to be some incentives other than simply the profit after taxes for all the financial risk, 24/7 on call stress, ragged marriages, bullsheet lawsuits, idiot bankers who think they are businessmen, employee clown show, OSHA/city/county/state/ paperwork nightmares, etc., etc., etc.
In fact, I'd estimate that if you don't do this, you're in the minority.
BTW, CPA's are great for doing the numbers but tax attorneys are even better for guidance... best is someone with both licenses on the wall behind his/her desk.
08-02-2013, 01:29 PM
#28
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Some accountants will be overly conservative simply to cover their own asses - at the expense of the interest of their clients. These decisions need to be based on facts about laws and risks, for example likelihood of an audit and likely audit outcome if putting a GT3 through a business. FWIW, my accountant is on the conservative side, and has never expressed concern about having an MB, BMW, or Porsche through the business. Key, as already noted, is to have proper allocation of business vs personal use, and backup for that if and when the need arises. But I pay my share of taxes and then some, and have never been audited ...
