Buying Model X through LLC

[KishoreMurari]

I have my MX 60D in Production now and I hope to get the delivery in next ten days by end of Dec. However I am in a dilemma whether to include my LLC name in the title so that I can claim section 179 deduction for heavy SUVs. I am confused with below questions.
-> Will LLC be listed as primary owner on the MX registration ?
-> If we include LLC on registration, should we take a commercial loan? Digital Federal Union bank agent is insisting that if LLC is listed on registration, then they cannot do a regular auto loan for discounted rates. Is this true? Is there any other bank/Credit Union that does regular auto loan with LLC on registration?
-> If we buy through LLC, should we take commercial insurance? My DS confirmed that I can use regular insurance.
-> Apart from section 179 - $25000 (Taxable Income deduction) and $7500 Fed Tax Credit, is there any other depreciation that I can take off in the first year or subsequent years?
-> Will it raise a red flag for IRS if we buy luxury SUV through LLC ? Does this justify for a single person LLC like that of mine? ( I understand that this is a CPA question, but I just want to know thoughts of people who already did this).

I have searched through the forum and found couple of threads on this topic, but I couldnt find answers for my above questions. Would be of immense help if someone who has done this before can share their research/thoughts on above questions.

 

[Wise1919]

I ran into the same problem with Alliant. They don't do loans for businesses. Check with US Bank. I know they will do a business loan because I use them to get my customers loans for campers. Tesla uses them. Yes I believe the primary owner will be the LLC. You can still put your name on the loan and title. You have to be on the loan also in order to have it on the title.

I'm pretty sure that you can depreciate 50% of the remaining balance in the first year and then totally write the entire amount off within the next 4 or 5 years. If you go to Land Rovers website, somewhere there they talk about how their suvs fall under 179 and show how its written off.

With that being said I would not write off 100% of the vehicle. It is almost impossible to use it 100% of the time for business use. I would do anywhere from 80 to 90% depending on how much you will actually use it for business. If you use it for business most of the time then you have nothing to worry about.

Hope that helps!

 

[nctalkinghead]

No offense to Wise1919, but the absolute last place I would be asking for such advice as the OP would be on any website! Get on the phone with the lawyer who helped set up your LLC and a CPA!

 

[KishoreMurari]

Many Thanks Wise1919. I will check with US bank on the Auto Loan.

Any thoughts on Insurance in this scenario?

Regarding depreciation, I recollect reading elsewhere on this forum that we cannot use any other depreciation first year apart from Section 179 & $7500 Tax Credit. Could this be because MX is all electric and it already receives $7500 tax credit?

Yes. I am planning to claim only 75% of usage even though I would most probably use it more than 80%.

NCTalkingHead - I did check with a CPA a week back on this and I heard similar rules as mentioned by Wise1919. The reason I am posting this here again is to double confirm/check with experienced folks who have already gone through this process before !!This is a big decision for me and I just want to make sure that I am doing the right thing !!

 

[flying_things]

I have my MX 60D in Production now and I hope to get the delivery in next ten days by end of Dec. However I am in a dilemma whether to include my LLC name in the title so that I can claim section 179 deduction for heavy SUVs. I am confused with below questions.
-> Will LLC be listed as primary owner on the MX registration ?
-> If we include LLC on registration, should we take a commercial loan? Digital Federal Union bank agent is insisting that if LLC is listed on registration, then they cannot do a regular auto loan for discounted rates. Is this true? Is there any other bank/Credit Union that does regular auto loan with LLC on registration?
-> If we buy through LLC, should we take commercial insurance? My DS confirmed that I can use regular insurance.
-> Apart from section 179 - $25000 (Taxable Income deduction) and $7500 Fed Tax Credit, is there any other depreciation that I can take off in the first year or subsequent years?
-> Will it raise a red flag for IRS if we buy luxury SUV through LLC ? Does this justify for a single person LLC like that of mine? ( I understand that this is a CPA question, but I just want to know thoughts of people who already did this).

I have searched through the forum and found couple of threads on this topic, but I couldnt find answers for my above questions. Would be of immense help if someone who has done this before can share their research/thoughts on above questions.

We are in the same boat. Model X is under production and will be registered with both my LLC and my name on it. After discussing it with Tesla financing team and my CPA, here is what I they told me:

1. From Tesla Finacing Team: US bank and TD Bank will do financing with business name on the title while alliant don't. It is not commercial financing , they are still using your personal credit score and income to determine your loan, not your LLC's. Having your business name on your title is solely for tax purpose.

2. From AAA insurance, they allow me to add my car to my personal insurance as long as my name is also in the title.

3. From my CPA: for first year that the car put into service, I can ultilize the section 179 on my new Model X with $25000 deduction, 50% bonus depreciation after than, and then regular depreciation.

Which means for a $100000 (after tax) Model X, if you have 100% business usage in your first year, the total deductible amount would be the total of three parts:


$25000 (section 179 for heavy SUV)

($100000-25000) * 50% = $37500 (50% bonus depreciation for 2016/2017 , rules changes very year)

($100000-$25000-$37500) *12.5% = $4687.5 regularly depreciation rate

Total deduction amount for first year can be: $25000 + $37500 + $4687.5 = $67187.5

If your business usage is 80%, multiple that amount will be your actually deductible amount.

 

[Wise1919]

No offense to Wise1919, but the absolute last place I would be asking for such advice as the OP would be on any website! Get on the phone with the lawyer who helped set up your LLC and a CPA!

None taken! I would agree, just trying to guide in the right direction! Definitely check with a professional, just going from personal experience as I'm in the same boat.

 

[Wise1919]

We are in the same boat. Model X is under production and will be registered with both my LLC and my name on it. After discussing it with Tesla financing team and my CPA, here is what I they told me:

1. From Tesla Finacing Team: US bank and TD Bank will do financing with business name on the title while alliant don't. It is not commercial financing , they are still using your personal credit score and income to determine your loan, not your LLC's. Having your business name on your title is solely for tax purpose.

2. From AAA insurance, they allow me to add my car to my personal insurance as long as my name is also in the title.

3. From my CPA: for first year that the car put into service, I can ultilize the section 179 on my new Model X with $25000 deduction, 50% bonus depreciation after than, and then regular depreciation.

Which means for a $100000 (after tax) Model X, if you have 100% business usage in your first year, the total deductible amount would be the total of three parts:


$25000 (section 179 for heavy SUV)

($100000-25000) * 50% = $37500 (50% bonus depreciation for 2016/2017 , rules changes very year)

($100000-$25000-$37500) *12.5% = $4687.5 regularly depreciation rate

Total deduction amount for first year can be: $25000 + $37500 + $4687.5 = $67187.5

If your business usage is 80%, multiple that amount will be your actually deductible amount.

This is pretty much how I understood everything. Great breakdown!

 

[KishoreMurari]

Many thanks flying_things for providing specific details & numbers.

So were you able to get the same auto loan rate as that of a normal direct customer? I currently have 1.49% - 65 months from DCU. But they dont do LLC type of loans.

To confirm, both LLC & Myself would be included in the title/registration.

Regarding all above deductions that can be taken in first year, I am assuming that all of the above deductions are on top of $7500 Federal Tax Credit?

I will have to check with GEICO insurance if I can add MX to the existing insurance policy if my name is included in the registration.

 

[Wise1919]

Many Thanks Wise1919. I will check with US bank on the Auto Loan.

Any thoughts on Insurance in this scenario?

Regarding depreciation, I recollect reading elsewhere on this forum that we cannot use any other depreciation first year apart from Section 179 & $7500 Tax Credit. Could this be because MX is all electric and it already receives $7500 tax credit?

Yes. I am planning to claim only 75% of usage even though I would most probably use it more than 80%.

NCTalkingHead - I did check with a CPA a week back on this and I heard similar rules as mentioned by Wise1919. The reason I am posting this here again is to double confirm/check with experienced folks who have already gone through this process before !!This is a big decision for me and I just want to make sure that I am doing the right thing !!

No problem! I would check with your CPA on the insurance end of it. We have blanket coverage for our dealership and the vehicles that we put a dealer plate on is covered under that blanket policy. Our insurance is of course written off as an expense. If you go the personal insurance direction, can you expense it? That would be my question.

 

[flying_things]

Many thanks flying_things for providing specific details & numbers.

So were you able to get the same auto loan rate as that of a normal direct customer? I currently have 1.49% - 65 months from DCU. But they dont do LLC type of loans.

To confirm, both LLC & Myself would be included in the title/registration.

Regarding all above deductions that can be taken in first year, I am assuming that all of the above deductions are on top of $7500 Federal Tax Credit?

I will have to check with GEICO insurance if I can add MX to the existing insurance policy if my name is included in the registration.

Some CU/Bank doesn't accept a loan if you have Business company on the loan, like Alliant , or DCU as you mentioned. But if the CU/Bank accept it, I am sure you can get the best rate if you are eligible.

I got the 2.49% from TD Bank , Tesla said it is the best rate from TD Bank. US Bank turned me down though. :-(

 

[KishoreMurari]

Flying_Things - I am going to try with US bank. I am assuming US bank turned down your loan app not because of this LLC purchase !!

 

[flying_things]

Flying_Things - I am going to try with US bank. I am assuming US bank turned down your loan app not because of this LLC purchase !!

US Bank turned me down because of my comparable credit score, at least it is how Tesla Financing told me.

You can just apply it via Tesla Lending, they have partnership with US Bank and can get the best rate for you. Just fill a application form and you can get a loan approval in 1-2 day. Good Luck!

 

[Watts Son]

MX 60D ? I wish. From what I understand, as long as the payments for the lease/finance come from your business/corporation account, you can take the deductions mentioned above

 

[KishoreMurari]

Thanks Flying_Things. Will post on this forum how this works out for me !!

 

[KishoreMurari]

Flying_Things...I did further research and I found a minor change in your calculation...Regular depreciation rate is 20% rather than 12.5%. So total amount deductible is around 70k for 100% business use for a 100k MX.

 

[flying_things]

Flying_Things...I did further research and I found a minor change in your calculation...Regular depreciation rate is 20% rather than 12.5%. So total amount deductible is around 70k for 100% business use for a 100k MX.

you are right!

 

[KishoreMurari]

Did anyone actually file LLC taxes after buying MX through LLC? As per my CPA, deductions are not rounding up to above numbers. Can someone post actual numbers ? Appreciate your help !!

 

[Dj B]

You don't need to put the car in your LLCs name to take deductions, and by doing so it may screw with your insurance premiums. Check with your CPA and your insurance company

 

[Dj B]

You don't need to put the car in your LLCs name to take deductions, and by doing so it may screw with your insurance premiums. Check with your CPA and your insurance company

Also, from a liability standpoint, if you were to ever get a in a wreck and kill someone and be found be driving reckless or drunk driving (not saying you do these things, just an example) the lawyers can now go after you and your company because both are on title. Again, Im not a lawyer, I'm not a CPA, I'm not an insurance agent so don't listen to anything I say. Just my thoughts.

 

[mr10012]

Has anyone researched what happens if the first year the MX is mostly used for business use and section 179 depreciation is taken, but in the second year the pattern of use changes to mostly non-business use by a controlling shareholder? Looks like the lease valuation method would need to be used, meaning that for each of the next 4 years there would be imputed income to the user of 25% of the fair market value of the MX times the percent of non-business use.