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Go Back   Hummer Forums by Elcova > Hummer H2 Discussion Forums > General H2 Discussion

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  #1  
Old 01-06-2003, 02:02 PM
Nancy Nancy is offline
 
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<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by HUMMERDOGG:
Nancy-

I thought I read where the X5 was only 4800. However, I could be wrong, being that I was really drunk last nite when I was responding to posts...

-HUMMERDOGG<HR></BLOCKQUOTE>

LOL! Friends don't let friends give tax advice when drinking.

I think the X5 is a few hundred pounds over the required 6,000.

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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  #2  
Old 12-24-2002, 08:08 PM
 
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Dan, As long as you own the company, the structure does not really matter. If it is a "C" corp, the corporation will pay less taxes. If it is an "S" corp, or an LLC, the bottom line income of the company will flow through to you and be taxed at your personal tax rate. Therefore, any savings to the company will also result in less taxes. Either way, you win.

It is more complicated than this, though. There are also things to consider when you sell the vehicle. In order for the transaction to be "closed out" on your books, you need to sell the vehicle at some point. If you merely trade it in, the book value is rolled over into the new vehicle and is calculated in it's cost basis. If you do sell it outright and the sale is for more than book value, you will create additional tax liability. Just be careful how you handle th whole transaction and discuss it with an accountant before hand. You won't want surprises.
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  #3  
Old 12-19-2002, 02:08 PM
H2Norcal H2Norcal is offline
 
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This is the only reason it makes sense for me to buy one....I currently have a Sierra HD 2500 with the 6.0 Vortec (nearly same motor as H2) as a business truck and love it. Unfortunately it has reached it maximum tax depreciation benefits. You definitely have to have a legitimate business with a position that allows you to do this and keep mileage logs or you will get hammered by Uncle Sam. I know several people that have. Fines are nasty.

I believe the tax rules state the vehicle must have a 8k Gross Vehicle Weight Rating (the vehicle weight is not relevant). The H2 qualifies. Many of the other mid-sized SUV's don't (a light duty Tahoe for instance is on the edge).

Good luck.
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  #4  
Old 08-19-2003, 12:35 PM
Kevin W Kevin W is offline
 
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Hey thre guys,
My father is a CPA and here it is as its explained to me:

Section 179 states that in the first year you can take a 100% deduction from $1.00 - $100,000.
So, you can write off your entire truck in the first year, the only catch is that it cannot create a loss. 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. As well, if your company made higher than the total cost of the vehicle, you can write off the entire amount. If you choose not to write off the entire amount in the first year, you can write off up to $7,000 a year after that. ( But he states that those laws change frequently, and if you are able to, write off asa much as you can in the first year)

Disclaimer: This is all info that I just had explained to me by my father who is a CPA, I am not. I design and build houses, so if some of this is a little jumbled, its only because I don't speak accountant language, and am trying to decipher it the best I can.

Hope this helps. If you have any other questions I can try and help as best I can.

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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  #5  
Old 01-01-2003, 02:46 PM
Nancy Nancy is offline
 
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Mac,

The Biltmore is a 45 minute drive and the traffic is sometimes horrible over the Causeway. Stay at the Marriott Waterside for the business portion of your trip and then go over to Clearwater for some play days. While the Biltmore would be a good choice, ultimate play days should be spent at the Don Cesar on St. Pete Beach or at the Gasparilla Inn in Boca Grande, in my not-so-humble opinion.

If you are bringing your wife also, there are some interesting things for her to do that are easy to get to from the Marriott. She can go to Channelside and Harbour Island by foot. Ybor City, Tampa's poor but still fun attempt at duplicating New Orlean's French Quarter, is very close by with easy transportation to/from the Marriott.

Nancy
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  #6  
Old 12-19-2002, 09:08 PM
SONA SONA is offline
 
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We keep a old volvo and my F-150 around...

"Let me show you my gun collection"
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  #7  
Old 12-29-2002, 05:53 PM
Steve R Steve R is offline
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...but are you an accountant?????

Nance...thanks for an excellent and thorough explanation. I myself am a contractor and being self-employed intend to take full advantage of the tax benefits available. Congrats on the H2 purchase...I'm quite certain you'll find the H2 being likew no other vehicle you've ever owned!
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  #8  
Old 12-31-2002, 03:34 PM
MAC MAC is offline
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Great! Nancy, The Temptation, I'll remember that, love hard to find soft shell crab. We will be in Tempa mid April on business at Marriott Waterside. Never been in Tempa. I spent hours on the web searching for some neat small hotel, instead of usual concrete block big hotel, but not knowing what is what and where is where, I gave up. On last trip to San Antonio, I found the Menger next to Alamo, that was a lot more fun than Hyatt. Will the taxi know about The Temptation?
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  #9  
Old 12-19-2002, 10:50 AM
SONA SONA is offline
 
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Since I am using mine to drive 95% for business (LOL) we are claiming the deduction. I have a number of friends who have done this sucessfully, first you need to be in a contracting or independent business owner to do it, i.e. get MISC 1099 as your source of income if you work for others, or totally be independent. For example I have a job that I get a W2 but also do independent contract work as well. You can not do it if you work for someone else and get only the normal old W2. As long as the purchase is made in the year of the deduction, up to 31 Dec 2002. It is a tax loop hole. That is why lots of high dollar earners have Suburbans and Tahoes or big pick ups. Most of the vehicles like this are eligible. We have looked VERY closely at this deduction and reviewed it with our accounting firm, the result being it is totally deductable and legal. The remaining cost is depreciated over the next 5 years. So it is 24 or 25 grand off the tax owed. I must admit, this fact was a major decision factor for our purchase of the H2.

"Let me show you my gun collection"
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  #10  
Old 12-20-2002, 03:08 PM
MAC MAC is offline
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Weight is based on gross weight of 8600 Ibs.
The deduction adds to your loss, your current year loss can be carry over to future years. That is if you intend to make money in the future years.

Every tax case is different, in my case I have been audited 4 years in a roll several years back, each time last months with IRS agent stationed in a office we gave him in my bldg. completed with his own laptop. I almost thought he was my employee. The MAIN point here is that they never checked auto log or expense receipts as conventional wisdom indicated. They mainly traced money flow in and out of all accounts, origin/reason/where it went, they tried to find unreported income or cash. All cases are different. Didn't bother me that much, I always follow the laws and rules, and all turned out clean and good.
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  #11  
Old 08-22-2003, 10:36 AM
Dan Dan is offline
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That's a good article, thanks!

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SUT on order since 12/02 - 10 months to go!
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  #12  
Old 01-02-2003, 12:35 AM
MAC MAC is offline
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Steve, I just found out this little note pad on top of your own last post, when I click on it I can correct my last post. That would be nice in real life if i can rewind and unsaid a few things.

What I do is whenever any fast food joints run out of hamburger paddies, I run into the nearest phone booth to change and fly out there with fresh supply.
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  #13  
Old 12-28-2002, 11:28 PM
Nancy Nancy is offline
 
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You guys have confused this a little but bits and pieces in this thread have the correct info.

First, assume the vehicle is used for business purposes. If not used business none of this applies anyway. And it does not matter whether or not the business is incorporated, a partnership, sole proprietorship or what have you.

The "Section 179" deduction refered to is the (currently) allowed deduction for otherwise depreciable assets. This means you can expense this amount straight away instead of spreading it over a specific number of years. This applies to tangible personal property used in a trade or business, of which a car is one. Note that the deduction cannot exceed the taxable income derived from the business activity. In other words, the Section 179 deduction is the lesser of taxable income or $24,000.00

Additionally, President Bush signed into law last March, tax legislation that allows "bonus" depreciation of 30% for all qualifying assets first placed into service by the taxpayer after Sept. 11, 2001 and prior to Sept. 11, 2004.

After the above rules are exhausted, any remaining basis is depreciated over a specified period.

Above are the general rules for depreciable tangible assets used in a trade or business.

But....there is a special rule about cars. It's how the tax code tries to "soak the rich" just like with phase-outs on itemized deductions on personal returns. Cars are limited to about $3500 of depreciation a year. That's really only has an impact for high cost vehicles like Mercedes, BMWs, etc. And...it would apply to the H2 except for this little thing:

Ta da...while limiting the deduction for luxury vehicles they realized that their target would also catch farm tractors, heavy duty road equipment and the like, so the tax law says that limitation only applies to vehicles with a gross vehicle weight of LESS than 6,000 pounds. The H2 exceeds that weight so the luxury automobile depreciation limitation does not apply.

So we can do some numbers here. For simplicity, the H2 cost $60,000 to place into service. 100% business use. No other depreciable assets were bought during the year so the whole $24,000 Section 179 expense is applied to the H2. Now the basis is $36,000. Next we take the 9/11 bonus depreciation of 30% which is $10,800. After that, regular depreciation, 20% of the remainder is taken, or $6,960. This means the first year we can expense $41,760 of the car, leaving a depreciable basis of only $18,240 for future years. 40% of this you get to take in year 2.

And there you have the current tax impact of buying an H2 for business use. If your business use is less than 100% then the numbers are adjusted proportionately.

Very cool. But keep it quiet. If Congress figures this out, the jig will be up!

Nancy (CPA)
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  #14  
Old 12-27-2002, 06:19 PM
x-mst.com x-mst.com is offline
 
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My accountant told me that I would get the $24,000 first year, and then and extra 30% on the remainder because after Sept11, Bush added the extra 30% first year capital depreciation to stimulate spending. After that 30%, I would then get the standard $2000-$4000 deduction. All this adds up to a whopping first year depreciation of the H2!

Anyone else heard of the 30% rule?
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  #15  
Old 01-06-2003, 12:37 AM
HUMMERDOGG HUMMERDOGG is offline
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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...
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  #16  
Old 12-30-2002, 01:10 AM
Nancy Nancy is offline
 
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Steve,

Yeah, I'm an accountant too. Boring, huh? LOL

Even though I am an accountant, I don't do taxes. I hate them. I have a very deep and very narrow specialty to which I limit my area of practice. A couple sections of the tax code effect it and that's it.

I don't even do work on my own return. The entire U.S. Tax Code really p**sses me off, so I just stay away from tax prep. When you really get down in to it, and understand just what they are doing to people, it will infuriate you. If you just see the end result of how much you pay in taxes, you are riled enough. See how it got there and you'd really get p.o.'d. My blood pressure is 95 over 60 and I keep it that way by not preparing tax returns of any type. Ever. [img]/infopop/emoticons/icon_smile.gif[/img]

But I do keep up with the changes in the law. The general provisions such as this depreciation/179 discussion are pretty straight forward in their generalities. We have some people in our office who are incredibly good at this stuff so I can't help but keep up, almost by osmosis. My husband is also a CPA and I guess we have a very weird office. Everyone in it has some unique and extreme expertise in some area of something. We are not a large practice and all know a lot about each others expertise just by being exposed to it daily.

I can't tell you how often I am jaw-droppingly surprised that all CPAs, or at least those not in giant national firms, don't know or can't explain this stuff, even when they don't work in taxes every day just like I don't. Perhaps our firm is just the Hummer H2 of the accounting world. [img]/infopop/emoticons/icon_razz.gif[/img] We're different that way.

As you might be able to see from my prior post to Mac, there is not one simple answer to even a simple question. While generally the deferral of depreciation recapture on an automobile requires a trade-in transaction, there are actually ways to structure a deal so you can indeed tranfer it to a third party other than a dealer, buy a new car from a dealer and still have a roll-over adjustment to the basis in the new car instead of recognizing the depreciation recapture as ordinary income. It's usually not worth the expense and trouble since the difference can be negligible, but it can be done.

So even small questions require very big answers since every situation is different and there is often several correct answers, any one of which is better in a given situtation. Always seek competent tax advice for your own specific circumstances.

Nancy
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  #17  
Old 01-07-2003, 02:11 AM
kelleymac2000 kelleymac2000 is offline
 
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teach you Dogg.

Kelley
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  #18  
Old 12-19-2002, 11:12 AM
Rickster Rickster is offline
 
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Thanks Sona. I spoke to my accountant and he basically said the same thing. Since I'm a commercial real estate broker (independent contractor) I would qualify.

This is great. Isn't it great to be an American and for Uncle Sam to subsidize our toys.. [img]/infopop/emoticons/icon_smile.gif[/img]
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  #19  
Old 12-18-2002, 12:03 PM
Rickster Rickster is offline
 
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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??
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  #20  
Old 12-29-2002, 04:48 AM
Nancy Nancy is offline
 
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Congratulate me! I finally got my husband to place his order for a 2003 H2 today! Hurrah!

He's been eyeing it since it was introduced. The man denies himself everything and the rest of the family nothing. He finally let himself do it.

Black, adventure series, wrap-around brush guard, carbon fiber dash, can't remember what else. But it's black on black on black. Just like the Suburban it's replacing. Supposed to be here in 5-6 weeks.

I've been lurking on the site for a while and really appreciate all the information so freely given here. It's been very useful. I'm a member of a similiar group for Mercedes owners and you guys are just as great as they are. Too bad my almost Luddite husband won't post on groups! I'll just have to do it for him. [img]/infopop/emoticons/icon_razz.gif[/img]

I can't wait to get a load of what we will look like...his big black H2 next to my tiny red SLK320. Should be quite a sight!

Nancy
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