DanP

Hi folks, sorry for probably repeating topics but needed a fresh one here...

Thinking of consolidating my '03 M3 and '02 Jeep GC into a single vehicle.

4x 911 owner, PCA member as far back as '86. Just avoiding noise in replies to this.

So, was going for an X5 4.4, then went to my old P dealer today and the S took the lead, no contest.

Next, I get an X5 4.6 demo tomorrow, but frankly if this new SUV GVWR new tax law thing is for real then that would translate to in essence a 35% discount of a TT Cayenne, and what could beat that?

So couple of questions: are the TTs out yet (I drove an S today and walked by at least 12 S's aat the ddealership, but not one TT).

Anyone have more direct info to this new tax law, and exactly when does it go into effect?

And if any idle CPA's are reading this, what is the best approach - keep trade in independent, pay in full and finance after the fact (if at all) or what?

Thoughts?

RJK

my understanding is that it is more than a 35% break but more like 45cents on the dollar, depending on your tax bracket. tax law is in effect as of approximately one month ago. a good link which explains it at length is at autospies.com. hope this helps. I as well am looking at a tt vs range rover and 4.6 x5. Good Luck.

IndyTim

Dan -

The TTs are definitely out, but are in short supply. There was one at the Porsche dealer in Grand Rapids, MI when I was there last week. It was Lapis Blue, by the way..

Can't help you on the tax law, sorry.

In case you haven't read it yet, I posted a thread on the very same scenario you are describing - selling my Jeep and my M3 to get The One Car (Cayenne S). That thread is called somethign like "Is the Cayenne S a One Car vehicle". Got alot of thoughtful replies.

DanP

Thanks for the replies folks.

More than 35%? Woo-hoo, I can only keep myself from waking up my CPA (not sure that I could, actually) <g>

If the S I drove today is great, I can only imagine a TT.

And Indy, yes, I started reading your thread but got somewhat depressed. Lots of opinions there.

But since deciding to switch I've been driving my '03 M3 *really* hard... (as in the turnpike no higher than 3rd gear) and unfortunately the ingrate decided to not let me go gently, if anything has become a bucket of fun since.

So I'm at the stage that maybe an S won't cut it, need a TT.

And folks, for 35%+(?), it'd be crazy not to TT, right?

Stirs

The X5 weight class also qualifies for the tax break which is in effect for vehicles in excess of 6000 GVWR. The tax break applies if you use the vehicle for business purposes and only to the extent that it is used for business. Under current law you can expense up to $100K of tangible personal (meaning not buildings/land)property subject to sufficient income to cover the deduction. Be careful with a trade as only the new portion of the vehcile you are purchasing would be eligible for the new tax treatments. The portion of the cost attributable to the vehicle traded would be depreciated as a continuation of depreciation of the prior vehicle. If possible keep the transactions distinctly different (there may be a trade-off of loss of sales tax credit depending on where you live). FYI: you also must purchase and not lease. Discuss your options with your CPA before you sign anything as some things cannot be undone or "fixed" later as some dealers have told my clients. Enjoy that TT and remember to wave to those of us in the lowly "S"'s. . .

Stirs

The X5 weight class also qualifies for the tax break which is in effect for vehicles in excess of 6000 GVWR. The tax break applies if you use the vehicle for business purposes and only to the extent that it is used for business. Under current law you can expense up to $100K of tangible personal (meaning not buildings/land)property subject to sufficient income to cover the deduction. Be careful with a trade as only the new portion of the vehcile you are purchasing would be eligible for the new tax treatments. The portion of the cost attributable to the vehicle traded would be depreciated as a continuation of depreciation of the prior vehicle. If possible keep the transactions distinctly different (there may be a trade-off of loss of sales tax credit depending on where you live). FYI: you also must purchase and not lease. Discuss your options with your CPA before you sign anything as some things cannot be undone or "fixed" later as some dealers have told my clients. Enjoy that TT and remember to wave to those of us in the lowly "S"'s. . .

rijk365gtb4

There is no good deal on the lease on a X5 4.6is. The residual on the TT is much higher (61% after 3 years). This means that the monthly payments are getting close together. So, it was easy to choose the TT over the 4.6

DanP

Well, drove the 4.6 today and it is no longer in the picture.

So back to a TT or S, depending on the tax answer. This link made me worry a bit hinting that it could be withdrawn: <a href="http://moneycentral.msn.com/content/Taxes/P48468.asp" target="_blank">http://moneycentral.msn.com/content/Taxes/P48468.asp</a>

But at 61% residual maybe it makes sense to lease, anyone know the range the TTs are generally leasing for (36mo/12k/minimal or no cap reduction)

Stirs

Dan:

It is highly unlikely that it would be withdrawn this year as it would be part of a tax reconciliation bill and any hints of tax increases at this point are not likely to be tolerated. Since it is a first year deduction only why worry about changes in the code in future years -- take advantage this year !!

Torags

Good post, Stirs. I did read there is a time limit, I just can't remember the termination date (its more than a year - starts on transactions after first week in May '03).

It part of G.W.'s attempt to invigorate the economy. Be patriotic buy a Pepper, and support your Porche salesman's family.

This is a business tranaction, so your interest payments on a car loan is also deductable.

DanP

Thanks!

So it would then go something like this:

I trade in both cars on a separate transaction, and unfortunately I then give up the sales tax credit that I would get here in FL (which will add about $4k).

I have the company (S Corp) write a check for the full value to the dealer.

After that, I assume I can't just turn around and write a personal check to the company for the truck.

But I'd love to get the truck off the company's name (just from the liability factor) as soon as possible. Actually, I could not really buy the truck back, even in 2004, because that would be considered income and "undo" the initial benefit, could I?

Seems messy, any creative thoughts out there that will keep me within safe accounting parameters? (yes, still waiting for accountant to get back to me!)

Stirs

Torags: When I said first year deduction, I meant that the deuction is available only during the initial tax year the asset is put into service. Meaning if you purchased it and put it into service in 2003 then the full deduction is available in 2003.

Dan: I would definitely advise keeping the transactions distinct. The vehicle would not have to be titled in the corporations name -- you would need only to ensure that the vehicle is used for business purposes of the S corporation. There would be an issue if at some point the business use drops below 50% or you convert it from business to personal use. There are complicated rules which apply in these situations so just ensure that this vehicle will remain in business use until it is replaced by another business vehicle. Your accountant will record the vehcile as a company tax asset and an offsetting contribution of capital from you. You may also ensure that vehicle under an individual policy and have the company pay the premium. Your accountant can evaluate the remaining basis versus trade-in on your current vehicle to determine whether it is wirth foregoing the sales tax credit.