[mouse549]

For tax purposes only is it better to lease, buy out right, or make payments on a new or used truck?

Thanx

[Fkatz]

Hi Mouse549

In answer to Question # 1 buying or leasing

It really depends on what type of lease you are going to get, But remember with a lease, when at the end of a lease, you must turn in the truck as if it was brand spanken new, no dents, scratches, or and forseen damage, including the inside of the cab area, remember you will be charged for all damage at this time and it could be very costly to you, alot more that it is worth. I personally would purchase a truck, Definitely Not New there are plenty of 1 & 2, or even up to 4 years old on the market/ And make sure you can get the maintaince records on it. if there are not any records, dont touch it with a 10 ft pole. Try and stay away from Cat 3126 engines that were made in Mexico, they were a mistake made and not recalled by freightliner who really new the situation prior to delivery. My Step son and Brother in law who delivered these trucks were constantly breaking down on the way to the dealers.

Other articles on this are available at [www.partners-in-business.com}
book


In answer to your question #2

Should you incorporate depending on which you choose. AND WHAT STATE YOUR IN.
FULL CORPORATION
C CORPORATION
S CORPORATION OR
LLC( lIMITED LIABILITY)

By incorporating, you protect your personal assets from being taken if you fail in business..
I personally would see how it goes before incorporating. AND USE THE SOLE PROPREITOR ASPECT. you might not want the tax liability involved right now at the present time WITH INCORPORATING.
Disadvantages:
#1 you would OR COULD be double taxed.
#2.you must carry complete insurance under the corporate name. Business Liability, major medical, health insurance and business loss, workmens comp, disability ( short & long term..
# 3 you must draw a salary, and pay Federal, state, Social Security, Medicare, Unemployment tax on a quarterly basis,
# YOUR WOULD HAVE TO FILE 2 SEPARATE TAX RETURNS. ONE CORPORATE, 1120, 1120c, OR A 1120"s" CORP AND A STANDARD 1040 LONG FORM WITH THE ATTACHED FORMS THAT GO WITH IT IT IS SUGGESTED THAT A LAWYER DRAW THE CORP PAPERS, THEY HAVE THE KITS, BUT HAVE IT DONE RIGHT, # And you must keep very accurate records.


Again check out the web site, [www.partners-in-business.com] and download the book or call the number and request a copy, I could quote all the information from it. but it would be easier if you did the download or viewed it online, remember you must have Adobe Areobat reader 4.0 or above. to see it. :)

[mouse549]

Thanx for the info.

What about a Tax number & company name as a Sole proprietor?

Would you explain to me about the depreciation of buying a new or used trk., without a monthly payment?

[Fkatz]

By the Way, Merry Xmas!

As far as tax is concerned,
if you lease? the full lease payment is completely, and totally Deductiable.
If is is a "B", or "C" Unit- Cargo Van, Box truck with Van or Pick-up, or any of the Class 4 or 5 trucks. you can take the standard mileage deduction also.
If it is a "D" Unit you are not suppose to take the mileage deduction but actual expenses of what it cost you to maintain

Your Vehicle Insurance,fuel, tolls, tires, repairs, oil, are allowed plus your satellite, occ. insurance, escrow, permits,plates. etc.
you cannot take the miles you are not paid for, these are not allowed. for instance,
deadhead that you are not reimbursed for or the mileage it takes you to go home, or to go to a staging area on your own.
you cannot take the depreciation on the vehicle at all if leased.

If you purchase said vehicle, only the interest that you pay on the note is deductiable,
plus you must take the actual expenses that you incur.
you do get the depreciation, but only a percentage for 3 years. it starts in the month that its is purchase the first year, and then the depreciation is pro-rated for the months in use.
After the 3rd year there is no other depreciation allowed. its fully depreciated where you then only get the actual cost of operating it.

If you decide to trade in or sell you must reclaim the full depreciation that was taking and it is added as income minus what it is sold for.

I will find out the exact formula over the holidays.
thanks
Frank

[paperback1]

HEY THERE MOUSE, I HAVEN'T TALKED TO YA IN A WHILE, HOW'S IT GOING? WHAT COMPANY YOU DRIVING FOR? :+

[boxtruck6]

HEY FRANK I,M AWARE THAT YOU CAN DEDUCT THE FULL LEASE AMOUNT, BUT CAN YOU ALSO TAKE THE STADARD MILAGE DEDUCTION? ALSO I RUN PRIMARY REGIONAL OUT OF MIDWEST WITH A MACK 24 FTER THAT I LEASE ON A MONTH TO MNTH BASICS, WILL THE BIGGER CO,S TAKE A TRUCK LIKE THAT? THANK,S BOXTRUCK;-)

[Fkatz]

Hi BOXTRUCK,
YES; IF YOU LEASE YOU CAN ALSO TAKE THE MILEAGE RATE.
BUT!!!!!!!
FROM WHAT I HEARD THRU THE GRAPEVINE IS THAT A LOT OF "D" UNIT DRIVERS/OWNERS ARE TAKING THE STANDAND MILEAGE RATE, BUT, THE LEGALLITY OF IT, IS ILLEGAL, IN A GVW TRUCK OVER ACTUALLY 10,000 LBS YOU ARE SUPPOSE TO TAKE THE ACTUAL EXPENSE, NOT MILEAGE, BUT ARE GETTING AWAY WITH IT, EVENTUALLY THEY MIGHT GET AUDITED FOR IT, IF THEY DO I WOULD NOT WANT TO BE IN THERE SHOES. TO HAVE TO PAY BACK THE DIFFERENCE EACH YEAR PLUS PENALITIES AND INTEREST, PLUS THE POSSIBILITY OF A FRAUD CHARGE, NO WAY. EVEN THOUGH THE STATUE OF LIMITATIONS IS 3 YEARS FROM THE DATE FILED, BUT IF THEY SUSPECT FRAUD THE IRS CAN GO BACK AS FAR AS THEY LIKE IN YEARS TO AUDIT. I KNOW OF ONE WHO HAD A CPA DO THERE RETURN IN 1991, TOOK THE MILEAGE RATE, AND THEY WENT BACK 10 YEARS TO WHEN HE FIRST WENT INTO BUSINESS, AND IT COST HIM OVER A $100,000.00 BETWEEN THE ADDITIONAL TAX, PENALITIES AND INTEREST THAT HE HAD TO PAY, HE WAS JUST A LOCAL DRIVER WITH A STRAIGHT TRUCK, SO HAVE DONE WHICH EVER WAY THAT YOU
WANT TO DO IT EVEN THOUGH MILEAGE GIVES YOU A LARGER DEDUCTION.
FRANK