AMDCPA has it right, depending upon your personal circumstances, state of registration, etc. I spent the past two weeks working with my CPA and investigating whether to lease or purchase personally or through my business (I'm a solo attorney with a sub-s corp.), as well as the "purchase and lease back" in order to maintain the federal tax credit. Following assumptions are made: Personal driving limited to a few miles per day (my office is within a mile from home); current (2014) mileage reimbursement $.56; depreciation of a luxury car is limited; not a cash transaction i.e.: lease or finance; goal is to reduce taxable income AND drive a Tesla MS.
1. Purchase by business doesn't make sense if you're going to finance. The loan repayment is not a business expense; you can only depreciate the value annually. At the depreciation rate it'll take you years and years to depreciate fully. When you sell, you're probably going to sell for less than the depreciated value, and will be able to use the "loss". You can get the $7,500 tax credit. Purchase by business won't work for me.
2. Purchase personally will allow for the tax credit of $7500 (with my marginal rate, this equate to an AGI reduction of nearly $24,000); reimbursement of $0.56/mile for business use; all vehicle costs (insurance, tag, etc) are paid for personally and not a business expense; loan repayment is made with aftertax dollars. We crunched every number possible, and it was clear that purchase and finance personally would not provide the benefit of reducing pre-tax income.
3. Lease personally. Same issue as with a personal purchase with financing. All paid for with after tax dollars.
4. Lease through business. This is the only option which makes financial sense in my circumstances. My business leases the vehicle, and all lease payments are considered a business expense (to the extent the car is used for business: it's reduced by the percentage used personally), as well as insurance, tag, Florida sales tax on leasing, etc. These payments are made with pre-tax dollars, which part of the objective here. Yes, I lose the $7,500 tax credit and the reimbursement of business mileage. However, it doesn't measure financially to purchase the car (caveat: I don't want to use cash for an outright purchase as the car is a 1st gen MS, and as someone stated above, the technology is changing rapidly. Also, I don't want to tie up that much cash in a depreciating asset).
5. The purchase and lease back. If you can find a way to do this which actually makes financial sense, please post a spread sheet which shows me how. My CPA said that it's mostly smoke and mirrors, and great tale to tell at cocktail parties, not to mention the issues with technical defaults under a loan when you transfer or lease. Not intending to minimize or criticize anyone who has figured this strategy out, but it just doesn't make sense for me.
Just to conclude: I'm going with a business lease in order to take advantage of the pre-tax expense. While I can't prepay the lease (you can only deduct the actual period), this option simply works the best for me as a small business owner looking at reducing taxable income, and getting to drive this amazing car. In 3 years, when the lease expires, my business has the option of a purchase. However, in 3 years, the MS is going to be even more fantastic, so I'll probably go through this exercise again.
One caveat here: I AM NOT A CPA or TAX PROFESSIONAL. Please rely on the advice of your own CPA. This is just a summary of what works for me in my particular circumstances.
KARMA