Discussion:Client wants a new car to lower profit
From TaxAlmanac
| Revision as of 16:05, 28 October 2009 Belle (Talk | contribs) (''...LOADED gros) ← Previous diff |
Revision as of 17:07, 28 October 2009 Seaside CPA (Talk | contribs) (It's my understa) Next diff → |
||
| Line 46: | Line 46: | ||
| Of course, we are all missing a big point here....just filling that SUV up constantly with gas will lower profits!}} | Of course, we are all missing a big point here....just filling that SUV up constantly with gas will lower profits!}} | ||
| + | |||
| + | {{ForumReplyPost|UserID=Seaside CPA|Date=28 October 2009|Text=It's my understanding that automobiles use the "unloaded" gross vehicle weight, but gross vehicle weight for trucks/vans/SUV's use "loaded" gross vehicle weight, as specified by the manufacturer. These weights should be listed in the owner's manual.}} | ||
Revision as of 17:07, 28 October 2009
Discussion Forum Index --> Basic Tax Questions --> Client wants a new car to lower profit
Discussion Forum Index --> Tax Questions --> Client wants a new car to lower profit
| 27 October 2009 | |
| I have a client who will be making over $100k on Schedule C and is worried that Self-Employment tax will be too high..He asked me about buying a SUV for business use only..he does have a SUV (small one) right now and has been taking SMR for last 3 years...he will give the old one to his son and buy new one weighing 5800lbs...can he take a section 179 on the new purchase and take SMR on the old one for the miles he drove for this year...if he can, how much is maximum if the cost is $42k... | |
| October 28, 2009 | |
| I believe the SUV weight limit for § 179 is 14000 lbs GVW. (fondly known as the Hummer rule)
Pickup trucks with 6 foot beds = 6000 lbs GVW. Either way - 5800 lbs isn't going to work for § 179. But yes, I do believe SMR for the first vehicle and actual for the replacement vehicle is allowable. | |
| October 28, 2009 | |
| Well, now I'm rethinking my position (after a bit of reading). §280f doesn't apply to SUVs (check the definition of SUV - being built on a truck chassis is part of the mix). So §179 is limited to $ 25000 (times the business % of use). What I just read (NOT IRS code as I'm at home w/o my research materials) seems ambiguous about an SUV weighing less the 6000 lbs GVW - as in your example.
Sorry - maybe I've just confused you more! | |
Death&Taxes (talk|edits) said: | 28 October 2009 |
| Good lord, sounds like you are back in 1983-84 again, when come late fall, many many clients would call and ask for my blessing to buy a new car. First question should be, 'do you need this?' Second should be, 'have you maxed out your SEP/401K?' and finally, "are you hoping for another 'cash for clunkers' in 2017?" | |
| 28 October 2009 | |
| When you buy one of these monstrosities, it's wise to hedge your bet by buying stock in one of the oil giants. That way, at least you're paying yourself for the privilege of driving the thing.
I recommended to our senior pastor the other day that our church buy a SUV to get in good with the Muslim's who've set up a prayer house around the corner. He's partial to vans though, on account of entertaining his girlfriends. | |
| 28 October 2009 | |
| Agree with D&T. Don't let the tail wag the dog.
Just ask those folks who invested in LP's in the 80's how that worked out for them. Just ask those folks who attempted to hold their ISOs 12 months in 1999-2000 how that worked for them. Or ask those folks who 1031 exchanged into a TIC in 2006-2007 how it is working out for them. Oh wait! They haven't yet realized that their investments been hosed. Unfortunately for us in this business, we will lose clients if we congratulate them about their profitability and recommend (after suggesting real solutions) that they are just better off paying the tax. | |
Death&Taxes (talk|edits) said: | 28 October 2009 |
| Here was my take from 2001 on the 'Gimme Shelter' questions:
http://www.writing.com/main/view_item/item_id/312669-MONEY-SCREAMS | |
Seaside CPA (talk|edits) said: | 28 October 2009 |
| If the SUV is built on a truck chassis and exceeds 6,000 pounds LOADED gross vehicle weight, you can take up to $25,000 in Section 179. If Loaded GVW is less than 6,000 pounds, you will be subject to the auto depreciation limits. | |
| 28 October 2009 | |
| If he can get a contract hauling some of that TARP money around to the banks, that should put a pretty good load on his SUV.
The government requires you to put a sign on the back, saying "Free money, For Banks Only. Others Need Not Apply." | |
| October 28, 2009 | |
| ...LOADED gross vehicle weight
Seaside CPA - so if the OP's client puts sand bags weighing 200 lbs in the back of the SUV, it would qualify? I've been under the impression it's the manufacturers stated GVW that counts (the one on the label of the driver side door jamb). I have clients who constantly add bells & whistles to their vehicles (like lumber/ski/luggage racks etc) that can boost the GVW. And you can always fill up the gas tank just before you go have the vehicle weighed - which is required in CA when registering a truck (or even an SUV if on a truck chassis.) Of course, we are all missing a big point here....just filling that SUV up constantly with gas will lower profits! | |
Seaside CPA (talk|edits) said: | 28 October 2009 |
| It's my understanding that automobiles use the "unloaded" gross vehicle weight, but gross vehicle weight for trucks/vans/SUV's use "loaded" gross vehicle weight, as specified by the manufacturer. These weights should be listed in the owner's manual. | |
