Any Accountants Out There???

[Rickster]

Since the H2 weighs over 6,000 lbs, someone told me there might be a huge tax benefit the first year if you use your car for business??

Does anyone know anything about this??

[maybe some day...]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Dan:

I have a question on that. What about carrying your losses forward?

- Dan

<HR></BLOCKQUOTE>

Yes, you get to carry over the loss against next year. Disclaimer: I am not an accountant, consult a tax professional before acting on free advice received on web forums!
PS: there are some excellent articles on the web about this from accountants and tax professionals.

[MAC]

Nancy, thanks for the help. Surprised to see "like-Kind exchange" for vehicles, I have dealt with 1031 in commercial properties and in legal cases, but did not know about cars. I have more questions, but I will not take advantage of you and will refrain from asking any further questions.

I love your description: "The man denies himself everything and the rest of the family nothing." Not exactly myself, but I will save it and see if I can use it one of these days, sounds very nice and elegant. It will come in handy when I want something I shouldn’t buy down the road.

"The man denies himself everything and the rest of the family nothing." Boys and gals, write that down.

[Nancy]

If you are asking what I think you are asking, the answer is yes, there are provisions for the Section 179 deduction and 30% bonus depreciation using Form 2106, as well as taking accelerated depreciation.

When you say accelerated deprecation, do you mean the Section 179 expense deduction and the bonus 30% depreciation? If so, I'd like to clarify some terminology first.

Accelerated depreciation the the declining balance method I posted about earlier in this thread. That's the MACRS thing: Modified Accelerated Cost Recovery System. The Section 179 deduction and the 30% bonus depreciation are distinct things from that. So you have three things:

1. Depreciation which can be accelerated with the declining balance method or can be straight-line depreciation. Note that if you use the standard mileage rate you are automatically deemed to have not elected to use MACRS.

2. The Section 179 deducution for expensing straight away certain otherwise depreciable assets.

3. The new bonus 30% depreciation.

You're biggest issue is that to take the Section 179 deduction and the 30% bonus depreciation on a vehicle, it must be used more than 50% for business use.

However, what I am unsure of is this:

So-called scheduled property has the limitation that unless it is used more than 50% for business, it is not eligible for Section 179 and bonus depreciation. Passenger vehicles as normally thought of are scheduled property. But that's always spoken of in the context of those vehicles that have a Gross Vehicle Weight Rating of 6,000 pounds or less and, among other things, have that total depreciation limitation in any one tax year to which the H2 is not limited.

So my own question is this: If the H2 is not a passenger vehicle subject to the depreciation limitations since it has a GVWR in excess of 6,000 pounds, it is also not considered scheduled property? If not, then it may not be restricted to the business use test of greater than 50% in order to take 179 and 30% bonus.

It's an academic question and I will get an answer. It's an unusual circumstance considering the combination of factors, but certainly not bizarre, so I'm quite curious about that.

Give me a few days. (You actually have a year to get the answer since it's 2003 already and is not affecting your decision about whether or not to buy). I've been out of town for a few days, need to get caught up then I'll see what I can find out. No promises one way or the other.

Nancy

"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -Benjamin Franklin, 1759

[Nancy]

Don,

Thanks for the welcome. This is such a friendly group, I will not hesitate to take you up on your offer to pepper you with questions.

Honestly though, I am amazed I found so many answers already during my lurking days. Even though the members don't agree on certain options and such, the debate was so well presented it was really easy to weigh the arguments and make a decision of which way to go on certain things with the H2 order.

Nancy

[Steve R]

Nobody wants to be audited...but nobody wants to give up a great deduction either. When it comes to having a vehicle used for business the IRS can be sticklers. It helps if you have a 2nd vehicle that you can claim is entirely used for personal stuff, while the "work truck" is all about work.

That's why I've kept my old car sitting around...just for back-up and to substantiate having a personal use vehicle...and even with that, it's a good idea to show the work-truck as only 80% work related anyhow. Just a thought.

[bklynh2srock]

Here's a link to the Detroit News article referred to in the WSJ:

[url=http://www.detnews.com/2002/autosinsider/0212/18/c01-38875.htm]

[mpetrich]

Yep, I am looking into this too. There is a tax exemption (I think it is Exemption 179) you can take for any commercial vehicle (and in this context, commercial vehicle is defined as any vehicle that weighs over 6,000 lbs.) that is used for business purposes. The first year exemption is $24,000. Again, though, I am still looking into it.
Thanks,
Matt

[Nancy]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by HUMMERDOGG:
OOPS, just looked it up and it seems the X5 just gets by with a GVWR of 6000... "Hair of your chinny chin, chin..."

GVWR are listed below at this link:


http://www.gonecamping.net/stories/tow_ratings.html

Sorry mambodoc for leading you astray. Hopefully this tax deduction doesn't influence your decision between H2 and X5...<HR></BLOCKQUOTE>

Those weights listed on GoneCamping are tow limits, not Gross Vehicle Weight Ratings. Two different things I thought. GVRW is roughly the curb weight (empty vehicle except for fuel) plus payload/cargo weight. But the site is not clear. Looking at the right side, they indicate they are listing GVWR. The list itself looks like tow limits. Are they in fact the same thing? I don't think so, but if the are, then the info is inaccurate, at least for the X5.

I thought the X5 GVWR was around 6,400. A woman who works for me has a BMW X5 4.4i. We just looked inside her door jamb and, sure enough, the GVWR is 6,405. It may vary slightly for the model above and the model below the 4.4i (or not vary at all) but it definately is NOT 6,000 as listed on gonecamping.net.

If the X5 was exactly 6,000 pounds it would not qualify since the GVWR must be in excess of 6,000 pounds, not 6,000 pounds or more.

Nancy

"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -Benjamin Franklin, 1759

[HUMMERDOGG]

I give up then... and to think that I thought everything I read on the internet was the truth...

[bklynh2srock]

BIG article on this topic in the Wall Street Journal today in the Personal Journal. All those interested may want to pick up a copy.

[Steve R]

A tax deduction!!!!!....I'm all over this like Rosie O'Donelle at a buffet.

Let's stay on this subject until we have some answers. Tax Laws may vary on state levels...but on a federal level....let's check it out!

[MAC]

In the case of a commercial property (example: an office bldg.), when I sell it, the capital gain is sale price less depreciable base, which means the depreciation I used in the past years will be added back in, uncle Sam gets his hands on the money eventually.

If that is also true with my equipment (Hummer), if I sell it 1 year later for $50000, my gain is $50,000 - $18240 = $31,760. I sell it $10K less than I bought it, but because of the depreciation I use in the first year, I actually make $31760 taxable income on the next year‘s returns. Is this correct? And is it regular income or is it capital gains with higher tax rate?

[Steve R]

Dear Nancy....I love when you talk this way!!

In the end...we still depreciate only the difference between the cost of aquisition and the residual value when we eventually sell the thing? That and all the operating expenses?

All we are doing is accelorating the expense, right? If you figure it cost $60,000 and will be worth $18,000 in 5 years...then our depreciable base is $42,000. Normally that would be expensed as $8,400 for each of the 5 years....but instead we can take a larger amount today and have less later? In the end...it only comes down to the tax money we don't spend today we can invest and have longer?

[98 SNAKE EATER]

Can you deduct the intrest on your payments for the vehicle if it is used for business?

Along with either your gas cost, maintenance, etc.?



Rick


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[MAC]

Van and Nancy, Thanks for tips. The Belleview looks great and the rates are cheap compared to downtown Tampa, how far it is from downtown Tampa? driving time-wise. The map for that area has very complicated coastlines with 3 cities, Tampa, Clearwater and St.Petersburg, I did not know that. Glad I asked, instead of just jump into a Tempa taxi "The Temptation, please." only to have the taxi driver find out I am the famous Hummer idiot. It will be a business trip with details to come later. Thanks very much for the hospitality, great people on a great forum. I think we will rent a car and drive around aimlessly all over the place. If we can find a place to rent a speedboat, that will be even better, we did that in Miami Beach. We always try to go on biz trips together, that way the most boring places can be just as exciting.

[Nancy]

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Vaka Humm:
Nancy, I haven't been to that restaurant but it sound great lets set it up. email me at vakatwo@yahoo.com I get down there about every weekend but I'll be there for ALL of Tarpon season, April, May and June . Maybe when Mac is down we can get togeather.
Mac, if you have time it would be worth it to come a little south of Tampa and visit some of the last unspoiled part of Florida on the west coast, not only Boca but also a little village of Punta Gorda (thats where my vacation house is that is going through some remodling)
PS Nancy do you and yours do the Tarpon thing in the pass??
When we are in Tampa we like to go for sushi at the Crazy Buffet, been yet?<HR></BLOCKQUOTE>

Van,

What is Boca except about fishing in the pass?!? Love it.

I've never been to the Crazy Buffet. I am one of those typical south Tampa people they talk about who rarely travels north of Kennedy. Besides, I'm not keen on raw fish.

Make a point of going to the Temptation on Boca. It sometimes feels like the whole island is there every night. I had erroneously thought you were on the island so I guess you didn't get my references to Boodles gin and other things. Sorry about that. I wasn't even thinking about Punta Gorda, Useppa or other places right there at Charlotte Harbor. If you do go to the Temptation, have them explain the Boodles gin connection. They have some great stories about this little restaurant.

Let's explore an H2 meet when Mac is in town. Could be fun.

Nancy

[This message was edited by Nancy on January 01, 2003 at 08:56 AM.]

[Hummie2]

You have outdone yourself one more time. If you ever decide to start an online consulting service you can certainly pick up several customers here on this forum.

Be sure an post plenty of pictures of your H2 when you get it. We all love seeing another Hummer.

If you ever have any tech or mechanical questions please feel free to ask. I will do my best to answer as clearly as you have. If I can't, Steve R or one of the others always come to the rescue with a great answer.

Super nice people here.

Don

[Rory]

All,
I just saw a piece about this very tax break that's being discussed on the ABC national news. They even mentioned and showed a yellow H2 on a dealers lot.
Maybe some of you on the West coast can catch it still.

Rory
'94 Wagon

[Vaka Humm]

Mac if you like "old world style" try the Bellview Biltmore in Bellair Beach near Clearwater.
http://www.belleviewbiltmore.com/
It is the oldest wooden stucture in Florida and very classy, with a great golf corse. Are you comming for grins or biz?