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12-30-2002, 12:32 PM
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Join Date: Nov 2002
Location: Boca Grande, Fl. Best Damn Tarpon Fishing On The Planet
Posts: 22
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Nancy, thank you for all the info. I just spoke to my CPA and because of you I'll save a ton-o-green!! Next time you and yours are field testing the new H2 in the Tampa area let me know and dinner is on me. This is a great forum due to folks like you that freely exchange ideas and information with all of us. Thanks again. BTW where is your firm located? Van
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08-21-2003, 10:08 AM
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Hummer Guru
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Join Date: Nov 2002
Location: Cognito
Posts: 2,155
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<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Kevin W:
...Example: Truck is worth $55,000 and your company only made a prfit of $40,000, you can only write off $40,000 in the first year...<HR></BLOCKQUOTE>
I have a question on that. What about carrying your losses forward?
- Dan
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 SUT on order since 12/02 - 10 months to go!
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12-24-2002, 09:06 PM
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Join Date: Nov 2002
Location: Savannah, Georgia
Posts: 141
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In fact you need neither be an LLC, S or C corp to take the deduction. Only be an independent contractor. The differnce is the rate at which tax liability is incurred, your personal rate or a corprate rate. It costs money to set up the corps LLC, S, C and they anual costs must be offset by any savings. In my case, not all of my income comes from my contracting jobs, but a good 40% does. What you use the vehicle for and the record keeping you use is more important then the corprate status you carry. If you have all of your income from contracting or business, and no other job... then you gain tax breaks by incorprating, but if not, then it is not worth it the cost and book keeping and legal fees required to incorprate.
"Let me show you my gun collection"
__________________
\"Life is tough... tougher if you’re stupid.\" \"Just think, right now, all over the world there are people exercising bad judgment. Somebody, right this minute, is probably making the mistake of his life
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12-19-2002, 12:08 PM
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Hummer Expert
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Join Date: Nov 2002
Location: North Texas
Posts: 523
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Here's another thought for those of us who have to finance and pay out the H2.
Take out a home equity loan to pay off the H2. Interest rate for the equity loan should be about the same and the interest in most cases is tax deductible.
At least this is what I heard. I haven't checked it out yet for my location.
Jim
Red H2 in Texas
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Jim
2003 H2 Metallic Red (now gone)
2008 H3 Graphite Lux
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01-27-2003, 01:39 PM
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Join Date: Jan 2003
Posts: 1
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Dear Nancy,
Thank you, Thank you, Thank you
What more can I say!
I am going to fire my accountant for not telling me about the accelerated depreciation loophole when I bought my Toyota Tundra two years ago.
I have a question for you. Can I use the accelerated depreciation on a vehicle that I bought new in year 2000? Last year I only wrote off the business use mileage on the Tundra. This year I would like to use the accelerated depreciation loop hole. Can it be done? I know that the vehicle qualifies but I don't know if the fact that I bought it two years ago matters. Also I don't know if the fact that I started depreciating the mileage last year matters. Any Ideas?
I have my eye on the H2 and am considering a future purchase. How do you like it?
Thanks
Dean
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08-20-2003, 11:59 PM
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Join Date: Jun 2003
Location: Philadelphia, PA, USA
Posts: 200
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Bumping this to the top since I took time to write a nice reply and nobody has responded!!!
HAHAHA
Kevin
2003 Pewter H2, Tire relocator, painted hard tire cover, billet gas cover, MC2 chrome hood handles, stainless bumper letters, 15% tinted front windows,pioneer nav/dvd, xm sat, headrest monitors, tv tuner, defenderworx hood latches, side vents, and marker bezels.
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2003 Pewter H2, Tire relocator, painted hard tire cover, billet gas cover, MC2 chrome hood handles, stainless bumper letters, 15% tinted front windows,pioneer nav/dvd, xm sat, headrest monitors, tv tuner, defenderworx hood latches, side vents, marker
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12-30-2002, 01:34 AM
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Hummer Authority
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Join Date: Nov 2002
Location: The Peninsula, California, USA
Posts: 1,415
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These are always a part of my conversation with accountants on personal or business tax issues:
No you can't. Yes, we can. No you can't. Yes we have.
No you can't. But we have. No you can't. But I read it in.....
on and on and on. In the end everyone is happy and confused.
Your specialist practice is common in professional field, that is the norm among attornys, accountants and doctors; specialist is where the money is, not general practice. In some legal cases we had to go through 10+ lawyers from different firms, working together or pass onto another firm for different stage of legal works, seek out 2nd opinion or more aggressive alternatives.
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12-29-2002, 09:01 AM
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Hummer Professional
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Join Date: Nov 2002
Location: La Porte,TX
Posts: 391
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Thankyou for your posts on the tax questions. Its nice to have our own resident tax consultant on the forum and I hope your H2 arrives soon. Believe me the 8wk wait on ours has been killing my wife and I, its here at trainyard but hasn't been delivered to dealer yet because holidays put deliveries behind a little. Better luck to you and your husband.
Your explanation on tax write off this year and recapture taxes in future were very understandable to me ( usually when I talk to our CPA I am totally confused ). I also have another Question on this subject. I have income from employment and my wife runs a small business out of our home. Bussiness is off this year, but thats not all bad, as 3 yrs ago (before we incorporated and corp. pays wife a salary) bussiness was good and our taxes were over 30k [img]/infopop/emoticons/icon_eek.gif[/img]. H2 purchase won't help taxes much this year for us. While researching the "Section 179" question I read that a NOL (net operating loss) can be carried back 5yrs to previous yrs. My question is there anyway to use Sec.179 or 30% law to create a NOL this year and go back and file amended returns for previous years when business was better?
Thanks and Welcome to Forum [img]/infopop/emoticons/icon_smile.gif[/img]
Don & Phyllis
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01-09-2003, 12:19 PM
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Hummer Veteran
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Join Date: Nov 2002
Location: Nashua, NH
Posts: 35
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Does anyone (Nancy?) know if the 179 depreciation applies if you file a 2106 (outside sales expense) form? I've used both the standard mileage rate and actual expense method on this form over the years and would love to be able to use the accelerated depreciation of the H2 even though my business related mileage is less than 50% of the total?
---Delivery NEXT WEEK!!!
-Dennis
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08-21-2003, 06:42 PM
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Join Date: Apr 2003
Posts: 154
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Here is a link to the best article I remember on this topic.
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01-05-2003, 07:56 PM
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Join Date: Dec 2002
Posts: 19
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<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by mambodoc:
I haven't purchased an H2 yet but I saw mentioned the a BMW X5 would qualify?...Any truth in this? Thanks.<HR></BLOCKQUOTE>
Yes.
The Gross Vehicle Weight Rating of the X5 exceeds 6,000 pounds. Look inside your door jamb and you will see the exact GVWR of your X5.
Of course, you have to be eligible for the deductions in the first place. If you are, the X5 purchase will enjoy the same tax benefits as the H2.
Nancy
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." -Benjamin Franklin, 1759
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Nancy
\"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.\" -Benjamin Franklin, 1759
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12-30-2002, 12:51 AM
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Join Date: Nov 2002
Location: Brooklyn, NY
Posts: 173
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Thanks, congrats and welcome all wrapped up in one!
Your descriptions have made it possible for even my law school-addled brain to understand. I still have nightmares about FedTax.
__________________
*******
Trapped in material plane,
she wants to fly and they think she\'s insane,
but she knows what she knows.
Give that girl wings and that\'s all she wrote.
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12-20-2002, 01:28 PM
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Hummer Professional
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Join Date: Nov 2002
Location: La Porte,TX
Posts: 391
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I think the weight issue refers to GVWR not curb weight. The vehicles listed in the article would have a GVWR of 6000 pounds. GVWR for H2 is 8600 lbs. and curb weight of 6400+lbs. Interesting to note however of the 38 listed vehicles H1 nor H2 are not mentioned in article. Journalists remember it when they want to slam it for gas mileage though!
When dealing with IRS be sure and keep a detailed log of business use verses personal use of a claimed vehicle, otherwise they might disallow a claimed deduction. We have a Venture van as part of a "S" Corp and our accountant advised us to keep the same records of vehicle use as we did before we incorporated and only claimed mileage on business use of a personal vehicle.
Don
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12-29-2002, 03:34 PM
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Join Date: Dec 2002
Posts: 19
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Don,
Thanks for the compliment about being able to understand my explanations. I only hope I don't make them so simple as to obscure certain points and, on the other hand, use terms that aren't widely recognized. Example, upon re-reading my answer about recapture depreciation, I used the term like-kind exchange. Which is the term I use, but I really should have said "trade-in" to make that answer more understandable. I use like-kind because that rule applies to more than just cars. So when I say the depreciation recapture can be rolled into the basis of a replacement car, that is under the like-kind exchange rules. Which means trade-in. It occurs to me that someone might think they can private-sale the car then replace it in the same year and get that treatment. It must be a single trade-in transaction, not two distinct transactions. I hope that is more clear.
For your situation, yes, you can carry back losses. However, Section 179 in and of itself cannot create a loss since it is limited to a maximum, $24000 for 2002, or taxable income. You cannot take net income below zero with a Section 179 deduction. However, when you can't take 179 because of this you end up having a larger depreciable basis so therefore more depreciation. That depreciation DOES create a loss that can be carried back. This also applies to the 30% bonus depreciation. Just not the 179 deduction.
With limited understanding of your specific circumstances, generally if you have zero profit, you start with the 30% bonus on the car then apply the first year depreciation of 20% to the remaining, creating a loss that can be carried back.
If you do not place the car into service by this Tuesday (assuming the corporation has a December 31 year-end), and it sounds like you won't be able to since it's still sitting in the railyard, you will do this for the 2003 tax year.
Nancy
__________________
Nancy
\"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.\" -Benjamin Franklin, 1759
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08-30-2003, 01:07 PM
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Hummer Veteran
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Join Date: Feb 2003
Location: NYC
Posts: 28
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Hmm, I wonder what this guy is selling
Rick
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12-20-2002, 01:12 PM
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Hummer Guru
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Join Date: Nov 2002
Location: Cognito
Posts: 2,155
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What if your small business turns out a negligible or $0 profit? I have a small business that will be starting up this coming spring but will probably not generate any revenue until 2004. The next year will be spent on product development, etc.
Is this write off beneficial for me as well, having a low/no profit business? Or does this only work if your business is very profitable??
Sorry, I'm a little new to the small business & related tax scene...
- Dan
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08-19-2003, 02:25 AM
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Hummer Veteran
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Join Date: Feb 2003
Location: NYC
Posts: 28
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I hate to bring up old threads, but this one is definitely worth doing because of all the useful info
We're actually considering doing this right now, but we still have a few questions...
I already know that I'll be able to write off up to $36K of the price, but can this be done partially over the time of financing?
In other words, instead of writing off a full $24K the first year and $12K over the next, could we finance the vehicle for say 6 years and deduct $6k for each year?
And how about deducting interest on payments and cost of maintenance?
Oh yeah, please type s l o w....
I failed basic math in HS
Rick 
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12-19-2002, 01:19 PM
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Join Date: Nov 2002
Location: Virginia
Posts: 88
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<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Texas Red:
Take out a home equity loan to pay off the H2. Interest rate for the equity loan should be about the same and the interest in most cases is tax deductible.
<HR></BLOCKQUOTE>
Another option is to do a refinance with a cash out option. The interest rate is lower than I could have gotten for a car loan plus it's tax deductible. And, if you increase your payments to 'pay off' the truck in 5 years, you get the added bonus of paying off your mortgage early. So, after a refinance, I'm paying the same I was paying for my house payment and MDX, knocked 5 years off the original loan and, can knock another 3 1/2 yrs off the mortgage. All of this made the H2 a bargain! And, I have the title.
Kim
KAC
'03 Red Adv Series
__________________
KAC
\'03 Red Adv Series
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12-29-2002, 04:28 AM
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Join Date: Dec 2002
Posts: 19
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Steve,
Yes, all you are doing is accelerating the expense. But a dollar today is worth way more than a dollar five years from now, so it's of great value.
And in the case of the H2, because of its gross vehicle weight rating, it means you will see depreciation you would pracically never seen due to the personal vehicle limitation that does not apply to the H2. The limitation of $3,000-3,500 (the number changes every year and there is also special this and that..I don't know the exact number for 2002 off the top of my head) means high cost vehicle'd depreciation is so many years out the it is beyond the life of the car. While you have the right to it in future years, you just can't get there.
There is no salvage value considered in the depreciation of a car used primarily for business us. Salvage value adjustments to basis are only used for straight-line depreciation calculations. Business use cars are depreciated using the declining balance method under MACRS (Modified Accelerated Cost Recovery System). The first and last year, the depreciation is 20% of the adjusted basis. The other years it is 40%. You can see how it works in the example I posted earlier.
Nancy
__________________
Nancy
\"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.\" -Benjamin Franklin, 1759
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12-19-2002, 06:39 AM
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Hummer Authority
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Join Date: Nov 2002
Location: The Peninsula, California, USA
Posts: 1,415
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This subject came up before on this forum and came up empty in the end. $24K sounds too good to be true, but I am all ears. Tell me more, please.
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