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1. |
Have you ever
looked at the issue of titling the vehicle in the company name
versus their personal name. |
For business vehicles
that have some personal use, the way that it is titled may make
a significant difference in the available tax deductions.
For purchased vehicles that are subject to the luxury tax rules,
it may be beneficial to title the vehicle in the personal name.
The more expensive the vehicle, and the higher percent of
personal use, the more pronounced this difference becomes. |
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| 2. |
Is it used more than 50%
for business?
|
Vehicles
that are used more than 50% for business are eligible for
Section 179 expense, bonus depreciation, and accelerated
depreciation. |
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| 3. |
Is it over 6000 Gross Vehicle Weight? |
Vehicles
over 6000 GVW are not subject to the Luxury Car
Depreciation Limits.
To the extent that they can use Section 179 expense
and extra depreciation, it is more advantageous to
purchase this type of vehicle. Section 179 limits
for 2005 have been increased to $105,000. SUVs are
limited to $25,000.00 List
of Qualifying Vehicles |
|
|
a.
What other Section 179 do you have
this
year?
b. Are you having a great year? |
If they are already at their
Section 179 limit, the advantage of purchasing the vehicle is
reduced.
If they are not having a great year, the advantage of
purchasing the vehicle is reduced. |
|
|
4. |
What is your tax
classification? |
There are differences in vehicle write-offs depending on tax
classifications of either Employee with W-2, Schedule C,
or Corporation. |
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| 5. |
How
are you writing off your current vehicle? |
Business people are not taking full advantage of the best
way to write off vehicles used in business.
This question will help you suggest a better way.
An Accountable Plan might be the answer. |
|
|
6. |
How
are your financial ratios and liquidity? |
If cash is tight or loan covenants may be jeopardized, it may
be advantageous to lease. |
|
| 7. |
How
often do you trade? |
It may be advantageous for people that trade often to lease
rather than buy.
They will not have to worry about resale value or
losing deductions when they trade in a vehicle. |
|
|
8. |
What is the cost of
the vehicle that you are going to purchase or lease? |
If a vehicle costs over $16,000 there are tax advantages to leasing the
vehicle, if it is used for business. |
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|
9. |
What
are you doing with the old vehicle? |
If you trade it in instead of selling it, if the book value
is greater than actual value, you will be giving up some
tax benefits. If you sell it, if the book value is
less than the actual value, you will be giving up some tax
deferrals. |
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| 10. |
Are you converting
a vehicle from personal use to business use? |
When converting an existing vehicle from personal use there are
additional limitations on expenses that you may take,
such as Section 179 expense. |
