Taking your truck/TC off your taxes as a corp deduction?

Mattyd wrote:
Thanks folks for the feedback...will see how the old CPA wants to approach this...or not!

Good decision.

A RV Forum is not the place to look for tax laws. This Thread will be closed.

Wayne
Moderator

I was in a business that had legitament deductions and some deductions were probably OK according to the tax preparers.

We looked at the amounts that we could gain, compared to the amount it would cost to defend our claims.

We decided that: If it weren't clearly deductable with 100% success that we would not claim it.

For example a fax machine... it was obvioustha we had no personal use for a fax machine.

Labratory supplies... no problem.

If we had a boat that would be used for testing propellers for upto 8 hours a week but MIGHT be used by any employee on the weekend... we didn't claim the boat.

We could buy a lathe, a mill, and other shop tools... to be used a few weeks at a time every 3 or 4 months... the crew might use the equipment for an undocumented personal job as needed.... we decided that we would incur risk to claim it. (We ended up renting a machine shop on their open 3rd shift... paid for the exact usage and claimed it on our taxes... there was no question that it was used for our business)

Our rule of thumb... be absolutely honest, document, verify ... don't waste time and money trying to get away with fraud or even the appearence of some thing that might be questionable.

It worked... fair and square.

Easiest if you have multiple vehicles so you can declare that one is used 100% for business purposes. It gets more complicated if you use it for personal and business purposes as then you need to maintain a log and keep track of when it is used for business and what percentage of the time.

There is another aspect worth exploring. The IRS allows a per diem expense for food and lodging by zip code and for example in Orange County, CA it is a total of $203 a day. You can take that deduction while on business and stay at a RV park or campground and fixing your own meals inside the camper.

You need real business income in the first place and cannot expense more than you produce in profit. We have a business where we make sales calls that would otherwise be too expensive to make if we flew into an airport, rented a car, ate at restaurants and stayed at hotels.

A good CPA can provide the information you need and keep you from being audited by the IRS. There are perfectly legal ways to avoid paying taxes as Mitt Romney has amply demonstrated so do not simply roll over for fear of an audit. I have been filing personal and business tax returns for more than 45 years and had only one audit and it was a random audit and not one generated by a return that was submitted.

Mattyd wrote:
I know a person who has a race car and deducts it as advertising for his business.. therefore he then deducts the truck and TC needed to pull the race car.
Another suggestion is since it is a licensing headache to title and run a pick up as a corporate vehicle-commercial plates etc to title it personally and deduct it corporately. Let the corp buy the TC since there is no title.
Any other ideas that have worked? Thinking of calling it a mobile office?

As a CPA, good luck with that. We always use this quote. Pigs get fat and hogs get slaughtered.

And just because a friend calls it a deduction does not mean it would survive an IRS audit.

Basically you'd need to prove a legit business use and document it with real reasons you can sit down and tell an IRS auditor with a straight face. Such as your a construction manager for Walgreens and travel the US building stores for them. And you camp onsite the entire time. Lots of rules and court cases on this stuff.

And just because the corp cuts the check for the TC does not mean its truly deductible for business purposes and audit proof. We do lots of tax returns for doctors and they pay for 100K cars out of the corp but for tax purposes they get a huge hit called fringe benefit adjustment to their W-2 and the Corporate deduction is limited. But their corp ''writes the check'' they tell their friends.

Thanks folks for the feedback...will see how the old CPA wants to approach this...or not!

You can write off anything you want on your tax forms. Probably the same in Canada. The problems start when you get "chosen" for an audit. It has been a few years, since I was audited, but the accountant services to help me with that audit, ended up costing me over $3,000 and the IRS ended up accepting it as filed. Now I was able to write off that cost of CPA services, on my following year's taxes as tax preparation fees. But over all it was very time consuming and not at all a pleasant experience.

I have found it best to spend the dollars, to sit down with a CPA or tax attorney, before I file and go over any potential write offs I am considering, even if I am planning on doing my taxes my self, which I do these days since I am retired and have a much simpler filing to submit.

romore wrote:
I am not a tax guru nor familiar with U.S. law. Here we can depreciate a portion of the value each year if it is used for business purposes but you might have to prove that. If the vehicle is registered in the company name and is available for personal use, that portion becomes a taxable benefit on your tax return.
There is another catch. If a company asset is depreciated to below it's fair market value, the surplus may be subject to capital gains. This can be an expensive issue if a home office is written off as a business expense and the house is then sold.

Whoa! You are confusing to separate and distinct income streams for tax purposes.

A capital gain is the amount by which the proceeds of disposal of the asset exceeds the original cost of the asset.

Potential capital cost allowance (CCA - tax term for depreciation) "recapture" is the amount by which the assets's proceeds of disposal exceed the tax book (depreciated) value. In the event that a CCA asset class pool becomes negative, that amount is brought into income as recaptured capital cost allowance.

On the disposal of an asset in a CCA class pool, the class pool of the asset is reduced by the lesser of the original cost of the asset and the actual proceeds on disposal. If the proceeds of disposal are less than the tax book value the class balance is reduced by the proceeds and therefore the amount by which the book value exceeds the proceeds remains in the pool for future depreciation. If the proceeds of disposal are grater than the book value the asset class balance is reduced as a result of the proceeds exceeding the tax balance of the asset.

Depreciated value of an asset does not have any relationship to the determination of a capital gain for tax purposes.

When I was building custom homes, we wrote off every expense including the truck and camper against the business, even when we were on 'information gathering' travel trips into the Rockies, Sierras and Mojave areas.

We were studying those areas and architectural history for design ideas for the homes we built, and touring the timber industry for information about lumber, and other industries for structural components. Shot a lot of photographs for use in our designs.

We survived two IRS audits ... and not one deduction was disallowed. It often depends upon how the books label various expenses, and if you can use that information for your income production.

Buzzcut1 wrote:
I asked my wife about that, she is a CPA with a masters in tax and a senior tax mgr in a fortune 100 company. I use the TC for my EMT work and was thinking along those lines.

She said that the IRS is very specific about what they will allow. The primary use has to be for business not occasional business use, you have to document everything: keeping a mileage, client log, expense reports. In my case she said no. I can deduct fuel costs, mileage going to an event, uniforms, meals but I have to document that and show my invoice for services rendered during the claimed period for tax purposes.

x2 on this. My wife works for a tax office.

You can write off the interest as a second home if it has a bathroom and full cooking facilities.

I asked my wife about that, she is a CPA with a masters in tax and a senior tax mgr in a fortune 100 company. I use the TC for my EMT work and was thinking along those lines.

She said that the IRS is very specific about what they will allow. The primary use has to be for business not occasional business use, you have to document everything: keeping a mileage, client log, expense reports. In my case she said no. I can deduct fuel costs, mileage going to an event, uniforms, meals but I have to document that and show my invoice for services rendered during the claimed period for tax purposes.