This is more geared for the wife since she is self-employed and will be looking to open her own place in the next year or two.
Yes, I screwed up the title. 
To write off a vehicle as commercial, do you have to purchase it new? Does it have to be a truck/SUV? Does slapping some advertisements on a car qualify?
I'm certain there are some people on here who have experience with this.
You can get around that by leasing from yourself instead of taking the depreciation on a business asset. No, it doesn't have to be a specific vehicle or vehicle type. I wouldn't expect a CPA to be driving around a 1ton dually to get to work, either to the office or client's place.
Oh, and no it does not have to be new. Just look at construction asset equipment that can cost 500k new, but only 300k used.
i have written off $300 astros. you have to have a log of business use if it is a dual use vehicle then you will be asked to provide the % of business use from those numbers. on a vehicle only used for business use a log book is not really necessary(but helpful in an audit i would assume), as you can just record mileage at beginning and end of year.
Are you just looking to fabricate a deduction, or will you be using it for business use?
If it is legitimate business use, it doesn't matter how it is owned or what type of vehicle. It's deductable.
However, a lot of people try to stretch this one pretty far, and the IRS is onto them. Keep a log book and do not try to deduct the amount that is used for personal use.
"Slapping some advertisements" probably technically does not count, but would be very convincing if audited. It would be tough to argue a standard issue minivan for an at-home mom who does not have another daily driver.
If it is used for business, it's deductable. If it is not, it's tax fraud.
In a lot of cases, you're better off taking the per mile deduction on your current vehicle. Unless you're using the vehicle 90% or more for business purposes, it really isn't worth the hassle...
Ranger50 wrote: You can get around that by leasing from yourself instead of taking the depreciation on a business asset.
More explanation on this please?
Ranger50 wrote: No, it doesn't have to be a specific vehicle or vehicle type. I wouldn't expect a CPA to be driving around a 1ton dually to get to work, either to the office or client's place.
So........if you're self-employed/own your business, just the car you drive to work could be considered a write-off? That seems to be pushing it a bit, no?
SvRex, not trying to "fabricate a write-off" just looking for some preliminary info before we talk to the tax guy.
In reply to z31maniac:
If your wife is the only employee and the business requires her to be there to be open....
I would put the other just as if you had a speaker box and some biz downs the street wants to use it. You charge a price and then the biz just writes a check to you and claims the use as the write off, since they aren't keeping it and taking the depreciation. Of course then you have to claim it as income....
z31maniac wrote: So........if you're self-employed/own your business, just the car you drive to work could be considered a write-off? That seems to be pushing it a bit, no?
I don't think you can write off a car that's just used to drive to and from your place of business, that isn't any different than anyone else who commutes to work. It has to be a vehicle you use for your work, say you're in sales and visit customers or you're a contractor with a truck.
stuart in mn wrote:z31maniac wrote: So........if you're self-employed/own your business, just the car you drive to work could be considered a write-off? That seems to be pushing it a bit, no?I don't think you can write off a car that's just used to drive to and from your place of business, that isn't any different than anyone else who commutes to work. It has to be a vehicle you use for your work, say you're in sales and visit customers or you're a contractor with a truck.
What about a retail/service type business where the vehicle is used to pick up product, advertise, etc?
Self employed? "All my time is company time"
In reply to z31maniac:
I wasn't suggesting or accusing, but your wording was unusual.
stuart in mn wrote:z31maniac wrote: So........if you're self-employed/own your business, just the car you drive to work could be considered a write-off? That seems to be pushing it a bit, no?I don't think you can write off a car that's just used to drive to and from your place of business, that isn't any different than anyone else who commutes to work. It has to be a vehicle you use for your work, say you're in sales and visit customers or you're a contractor with a truck.
This is theoretically correct, but not in practice.
For example, if a company allows an employee to take the company vehicle home regularly, the travel to and from is still a business expense.
A similar argument could be made for the owner, but I don't recommend it. The deduction has a low enough value that it is not worth the red audit flags it creates (unless the car is owned by the company)
^^^ Its also a taxable fringe benefit to the driver
You can go the easy route, and simply deduct the miles driven for work. You can guestimate it, but you'll do better for an audit if there is a log kept in the vehicle.
You can go the far more complex route, and attempt to itimize and depreciate it. This is where lots of records must be kept. Purchase price, selling price, repairs, driving records that show work miles vs others, etc.
You can really get going, and have the business buy the car, and allow the owner of the business to enjoy the cars use ad a perk. Real complicated records now, and the IRS loves crawling through these records to prove fraud.
Personally, I just go with #1, and write off the mileage of whatever vehicle I use as at the standard IRS rate. Be it for the farm, sole proprieterships, or the corporation. It's a lot easier and I haven't found there to be much of any gain with the other routes.
Sounds like the mileage deduction is the way to go, so my last question would be:
A dual-use vehicle, with a vinyl advertisment wrap or similar, do ALL your miles then become deductible since you are using it for your business by advertising everywhere you drive?
With respect to a dual-use vehicle, the amount of time/use that would characterize as personal (grocery run, shopping, traveling to see family, etc) will not be deductible at any time--even with vinyl graphic advertisements.
Any use while conducting business (home to client, office to client, office to store for supplies) would be deductible.
Normally home to office mileage is not deductible, but I am not sure about this in regard to self employed individuals.
I think current IRS mileage rate is $0.55/mile.
I am not a CPA....yet. (Still gotta pass those exams).
<--lurker extraordinaire
In reply to z31maniac:
Rsinn is right - not deductible. The sign idea has never worked. Plenty of people will tell you otherwise, usually people that just haven't been audited yet.
rsinn wrote: Normally home to office mileage is not deductible, but I am not sure about this in regard to self employed individuals.
According to the link SVRex posted, if you're self employed, home to office mileage is only deductable if most of your business is done from home but you're temporarily working on a project elsewhere - see this link for the specific section.
http://www.irs.gov/publications/p463/ch04.html
For example, it looks like it could work if you usually work from home but occasionally rent an office to meet with clients.
z31maniac wrote: A dual-use vehicle, with a vinyl advertisment wrap or similar, do ALL your miles then become deductible since you are using it for your business by advertising everywhere you drive?
You can deduct the cost of the wrap as an advertising expense. As others have pointed out, you couldn't write off the driving as an advertising expense.
Your wife could pay herself to advertise, and deduct that payment, but she would have to pay income tax on that payment to herself. Which wipes out the gain, and raises pesky red flags to the IRS.
Kinda like paying yourself to go get the newspaper first thing in the morning, so your trip to the office is actually your second job. Sounds good in theory, but won't survive an audit.
I would just take a mileage deduction for real, legitimate business trips. Forget about the rest. The money you might save by itemizing your car expenses would probably be offset by the accounting and tax headaches it would cause.
THanks for the advice gents', I think she already has some type of deduction for it, not sure.............we file "Married but separate" on our taxes since the house is in my name and she is self-employed, makes things much easier.
Just looking down the road as I'm sure we will both be involved in opening her business.
foxtrapper wrote: You can really get going, and have the business buy the car, and allow the owner of the business to enjoy the cars use ad a perk. Real complicated records now, and the IRS loves crawling through these records to prove fraud.
Machine shop I worked at did that except it was an airplane instead of a vehicle. Every Friday at noon he would load up 2-3 boxes of parts and fly them from Irwin, PA to Somerset, PA. Didn't seem to matter that at the same time I was making the same trip in the shop truck with the other 20 boxes of parts. My round trip would take 1 hour and 45 minutes.
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