frayed

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?

Igooz

Two parts to your question...

With respect to the cash buy...that is old school and very conservative which is good and I like that. But Rule 1 is never use your own money when you can use someone else's money. I am not promoting silly and high risk investments, but money is very cheap right now. If you can control yourself put some of this money elsewhere and finance the car...

On the taxes, YES! You can do what you have suggested as long as you follow the code and keep it legit which is what you are portraying.

I always lease the car to the company follow the IRS use code since I am super conservative, and don't look good in an Orange jumpsuit, borrow cheap money and a few years later when depreciation is low enough pay cash and buy under my name. The downside my cars always look like they are 2 owners (CarFax) since there is a title change.

These are not ground breaking T&A techniques so a good accountant should know what to do...you just need to make sure that this accountant is a CPA and follows highest codes of ethics.

frayed

Thanks.

Want to keep it legit since the tax savings in the big scheme of things, is modest. But if I can get some it paid pre-tax it would be awesome since my overall tax rate for 2013 is projected to be 40% (almost 40% exactly) for federal (income, self employment, medicare/caid).

991 3Turbo

Who wants to keep logs on how much time car is used for business versus pleasure. Might as well stand outside your business with a red flag if your company car is an exotic or semiexotic. I would never try that nonsense. If and when you get audited they are gonna be very tough to talk to with GT3 on the return. Have fun.
I would just get tax deductible loan and lease or purchase the car which is perfectly acceptable.

Igooz

????????????

^with all due respect, company owned exotics are absolutely not unusual and not excluded. Many a years with S-classes, AMGs, TT's, etc. "none sense?...."

This is not ground breaking territory and your accountant can give you details on usage, tracking, etc.

Best of luck.

reidry

Sounds like the perfect application for the "Electronic Logbook" option.

Ryan

Bluehinder

Don't complicate things, just pay cash. Only way to buy toys.

kosmo

Buy it under company name. Put a sticker on it that says "Frayed & co"
And youll have a company car!

SamFromTX

Igooz

+1
...."will race for food"

frayed

Lol!

Porsche997s

I have always opted to buy the toys with cash in the past, however money is very cheap right now. Have you guys ever considered a one payment lease... That way if the car turn out to be a dog you just give them the keys and walk away. If you like the car, then just buy it?

991 3Turbo

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.

Mike in CA

I'm a cash buyer. Leasing makes no sense for me, and I'm certainly no expert on the subject, but I would think that it might at least raise a flag for the IRS if your "company car" is a $150K 2 seat track oriented car. Unless of course your company is in the business of providing thrill rides.

frayed

Rare to have a client in the car. Common to drive to 200 miles to visit a client.

I'm not a CPA, which is why I employ one to handle my business and personal taxes. I will dig into the issue in more detail with him, however.

I want to keep this clearly 'in between the lines' but am interested in any tax savings I can achieve w/o raising the ire of the tax man.