Question re: Section 179 and Model X

[farzyness]

Hi gang,

I have a small business I started this year, and I've been looking at the Model X as a purchase. I'm looking to gather opinions and usage of members on this forum who have a Model X and have used (or are looking to use) Section 179 for 2016. I'm looking to use the vehicle as follows:

- Transportation to and from the business
- Transport of items, furniture, fixtures, and materials to and from the business
- Marketing of business (i.e. logo on the car)
- Display of vehicle in parking lot to attract attention (i.e. wings up while parking to get people to stop by)

Reading the code it looks like the vehicle could apply, but would be appreciate of feedback to see if this is a real use of the code or not.

Thanks all.

 

[aesculus]

Not a tax expert but if I recall there are just two classifications: You use the car in business and your can deduct whatever portion of the vehicle that is business related. If you use 100% for business you have to state you have another car available for personal use.

The other question that comes up is if you use the car for hire (ie Urber, ambulance, taxi, dirt hauler, etc)

 

[cpa]

Farzyness, there is a whole body of law (regulations and case law) concerning Section 179 and business use of personal vehicles. It is too vast and complex for an internet forum. Remember these are two separate issues.

I strongly urge you to contact your tax professional, or if you do not have one, get some referrals and engage one to keep you out of trouble. I would think that an experienced lawyer or CPA (or really good EA) could give you the necessary information with cites. To me, the couple of hundred bucks spent in getting a better grasp of the law is worth it, but I am in this profession so perhaps my bias is showing.

Here is a freebie: There have been a couple of court cases that have disallowed business use of a vehicle when the taxpayer slapped on some advertising so that there would be more visibility to his business as the taxpayer drove around town on personal matters. This technique is not business use. Ever. Period. However, the advertising logo placed onto the car was allowed as a business deduction.

 

[farzyness]

Farzyness, there is a whole body of law (regulations and case law) concerning Section 179 and business use of personal vehicles. It is too vast and complex for an internet forum. Remember these are two separate issues.

I strongly urge you to contact your tax professional, or if you do not have one, get some referrals and engage one to keep you out of trouble. I would think that an experienced lawyer or CPA (or really good EA) could give you the necessary information with cites. To me, the couple of hundred bucks spent in getting a better grasp of the law is worth it, but I am in this profession so perhaps my bias is showing.

Here is a freebie: There have been a couple of court cases that have disallowed business use of a vehicle when the taxpayer slapped on some advertising so that there would be more visibility to his business as the taxpayer drove around town on personal matters. This technique is not business use. Ever. Period. However, the advertising logo placed onto the car was allowed as a business deduction.

Thank you for taking the time to respond!

 

[jbumps]

Hi gang,

I have a small business I started this year, and I've been looking at the Model X as a purchase. I'm looking to gather opinions and usage of members on this forum who have a Model X and have used (or are looking to use) Section 179 for 2016. I'm looking to use the vehicle as follows:

- Transportation to and from the business
- Transport of items, furniture, fixtures, and materials to and from the business
- Marketing of business (i.e. logo on the car)
- Display of vehicle in parking lot to attract attention (i.e. wings up while parking to get people to stop by)

Reading the code it looks like the vehicle could apply, but would be appreciate of feedback to see if this is a real use of the code or not.

Thanks all.

The transportation to and from would need to be allocated out as personal use, The transportation of materials would probably pass, so long as sufficient documentation was maintained.

cpa is spot on regarding the last two items on your list. I cannot recall where the case originated from, but I do recall a bit about the case (or a similar one to that which cpa is referring). A dentist claimed significant vehicle expenses for his practice, claiming that various practice logos, decaling, etc... made the vehicle a billboard of sorts. His position was that, even while on personal use, the advertising they received from the vehicle justified a business classification for that activity. Short of the long, he took the position that the vehicle (more than one IIRC) was 100% business use. The court sustained the IRS's denial and the check back to Uncle Sam was rather large.

Moral of the story - CPA's are often far more affordable than asking for forgiveness later while in the midst of an audit, or paying more tax than you should, as result of missed tax avoidance opportunities.

 

[gjunky]

Anyone filled their taxes yet and claimed their Model X under section 179?

 

[Cowby]

it's been done plenty of times with the hummer loophole....definitely hire a CPA tho to do your taxes and let them guide you through this quagmire!

 

[Mike M]

Will be 179'ing our X this year, we even registered the vehicle in a business name, however, as noted before, check with your accountant. Important you use legitimate business expenses and include legitimate personal use. I'd rather lose a few dollars then claim the entire deduction and end up with an audit.

 

[gjunky]

Yes, it is definitely going to the cpa. We'll see what she says. We actually use it for the business, my wife is a realtor, a lot. It really is a great car for that and everyone remembers the ride.

 

[Hitman007]

Yes I took 179 this year. CPA did the work. Just document every mile for business. There are iphone apps but I still like the old automotive log book.

 

[brucet999]

Isn't there a sort of "no Rolls Royces" clause in vehicle expense deductibility rules?

 

[brucet999]

- Display of vehicle in parking lot to attract attention (i.e. wings up while parking to get people to stop by)

As one whose neighbors have cats that want to mark territory, I would be disinclined to park my car with doors open all day.

 

[cpa]

Isn't there a sort of "no Rolls Royces" clause in vehicle expense deductibility rules?

Congress settled that in '86 by limiting the amount of depreciation that could be taken each year. For ordinary cars there is an annual cap on the amount that can be deducted. For vehicles over 6,000 pounds GVW those limits are relaxed. But operating expenses are still deductible in full (times the business use) regardless of the vehicle.