Time running out for Model X 2017 *massive* business-use tax deduction

[number12]

But if you're audited, can the IRS accuse you of abusing the system?

Just remember 4% of high networth ppl get audited and 2% of middle to low networth people.

Roll the dice!!!






Jk

 

[McRat]

This 'Mercia.

Until tax law becomes remotely fair.. these 'loop holes' are the only thing slightly leveling the playing field.

I don't think of it as a loophole. Loophole is as overused as cusswords; the word no longer has real meaning. I think of it as a law that was deliberately written with the intention of being misused by the politicians and other white collars as well as professionals to misrepresent what a true work vehicle entails as opposed to a passenger car. If it didn't have an available Work version or is not sold by commercial truck dealers, it's most likely a passenger car, not a real work vehicle bought for the daily needs of a business.

Sort of like how politicians write laws that exempt politicians. Or vote for their own salary increases. Legal but morally bankrupt. A demonstration of what politicians think of taxpayers.

IMO, this is not partisan politics. Both major parties are corrupt at their foundations and need to be torn down. When fresh blood enters the mix, the hordes of self-serving existing politicos make it impossible for them to change anything.

The idea that people other than themselves would misuse the law also was of no concern, since it all they care about is their own personal wealth.

IIRC, we used this law? But an E350 can be loaded with forklift and haul a 15 foot forging that weighs over 2500lb. And it can seat 15 people if required, and was under $40k. Not exactly an luxury SUV that holds 7 'friendly' people. In fact, it only had seating for more than 2 when required to assist the schools after buses became unavailable so the school staff could have more days off.

 

[idleuser]

you'd be wise to tread softly, do you realize that the money you are reimbursed could be subject to be treated as income?

Thanks, I’m going to ask my cpa but it seems more like a grey area since my car isnt being depreciated for the mileage driven.

 

[mongo]

Do you have to be on a 1099 to use this? I am employed on a W2 but most of my driving is related to business use. For example, I drive 10,000miles a year that is related to my job (I actually get reimburse for mileage) and the remaining 5000miles is related to personal use.

Typically, you can either depreciate the vehicle and maintenance, or claim the IRS per mile. If the latter, depending on the employer's plan, it's not taxable/ reportable (payment offsets the deduction). Depreciating a vehicle you use as an employee is an interesting question. Personally, I'd stay with the mileage route since it avoids issues later when/ if you sell the car, along with the paperwork involved.

Federal Tax Laws on Mileage Reimbursement - TurboTax Tax Tips & Videos

 

[idleuser]

Typically, you can either depreciate the vehicle and maintenance, or claim the IRS per mile. If the latter, depending on the employer's plan, it's not taxable/ reportable (payment offsets the deduction). Depreciating a vehicle you use as an employee is an interesting question. Personally, I'd stay with the mileage route since it avoids issues later when/ if you sell the car, along with the paperwork involved.

Federal Tax Laws on Mileage Reimbursement - TurboTax Tax Tips & Videos

After doing more research, the standard deduction factors in deprecation, wear and tear, gas expense, etc. So I wouldn't be able to use both the Section 179 and standard deduction. However, I can choose to use the Section 179 by purchasing the car before 12/31 midnight and filing it for my 2016 taxes but I won't be able to take the standard deduction and take the mileage reimbursement. So I'm better off taking the standard deduction vs Section 179.

 

[LyftupX]

It’s been noted on the other Tesla forum that bonus depreciation is being increased from 50% to 100% in year one from the new tax bill.

If that really is the case , I imagine all remaining Tesla’s will be sold before year end. It’s doing retroactive for 2017 purchases back to Sep.

One thing I wonder is how the % use factors in ... I know you must maintain 51% over the life but in year 1 if you do 90% you essentially capture all depreciation at that rate. How can this be accounted for?

Things are getting interesting.

 

[nrigali]

It’s been noted on the other Tesla forum that bonus depreciation is being increased from 50% to 100% in year one from the new tax bill.

If that really is the case , I imagine all remaining Tesla’s will be sold before year end. It’s doing retroactive for 2017 purchases back to Sep.

One thing I wonder is how the % use factors in ... I know you must maintain 51% over the life but in year 1 if you do 90% you essentially capture all depreciation at that rate. How can this be accounted for?

Things are getting interesting.

That's really interesting to hear.

Do you have any references on this?

Also I don't want to take the full 100%, I only want to take 50% so I am wondering if it is possible to pick how much of the bonus you take? Works out much better for me that way. I'll have to ask my CPA.

 

[dmunjal]

That's really interesting to hear.

Do you have any references on this?

Also I don't want to take the full 100%, I only want to take 50% so I am wondering if it is possible to pick how much of the bonus you take? Works out much better for me that way. I'll have to ask my CPA.

This is all I've seen on it.

Luxury Rides And Simple Math: Tax Bills Offer More Than Pass-Through Cuts

 

[Skidmark]

Who knows how long your going to own the car.

If you don't keep the vehicle until it's fully depreciated, you will have to pay taxes on the recapture of the bonus depreciation you took.

 

[GOPJEW]

This is all I've seen on it.

Luxury Rides And Simple Math: Tax Bills Offer More Than Pass-Through Cuts

This refers to cars...the X is larger and falls under a different category where 100% is now deductible in first year. S owners will be better off though....

 

[Harlam]

Hi everyone,

Sorry for joining this conversation late. I've recently started a company and so am not clued in you all the deductions noted. I did do research on section 179 and the bonus deduction. I have two questions, how would a model x qualify for both the 179 $25k deduction and the bonus deduction 100%? My CPA said it would only qualify for the $25k deduction. Second question is if the bonus deduction only qualifiers for new purchases, ie, I wouldn't be able to buy a cpo model x and qualify for the bonus deduction ? Thanks in advance and sorry for all the questions.

 

[MelaniainLA]

Hi everyone,

Sorry for joining this conversation late. I've recently started a company and so am not clued in you all the deductions noted. I did do research on section 179 and the bonus deduction. I have two questions, how would a model x qualify for both the 179 $25k deduction and the bonus deduction 100%? My CPA said it would only qualify for the $25k deduction. Second question is if the bonus deduction only qualifiers for new purchases, ie, I wouldn't be able to buy a cpo model x and qualify for the bonus deduction ? Thanks in advance and sorry for all the questions.

I'm no CPA but mine (and every other) did say that the the 100% bonus is IN ADDITION to Section 179 -- this was in the Trump tax bill. Moreover, the Trump bill included USED purchases as well. Many articles on this online.

 

[GOPJEW]

Hi everyone,

Sorry for joining this conversation late. I've recently started a company and so am not clued in you all the deductions noted. I did do research on section 179 and the bonus deduction. I have two questions, how would a model x qualify for both the 179 $25k deduction and the bonus deduction 100%? My CPA said it would only qualify for the $25k deduction. Second question is if the bonus deduction only qualifiers for new purchases, ie, I wouldn't be able to buy a cpo model x and qualify for the bonus deduction ? Thanks in advance and sorry for all the questions.

The X is over 6,000 lbs - allowing it to qualify as heavy machinery and not just a vehicle - get a better CPA.

 

[GayForEllon]

I'm no CPA but mine (and every other) did say that the the 100% bonus is IN ADDITION to Section 179 -- this was in the Trump tax bill. Moreover, the Trump bill included USED purchases as well. Many articles on this online.

Sounds like your "CPA" didn't understand that the tax law changes only took effect in CY 2018...

 

[mongo]

Sounds like your "CPA" didn't understand that the tax law changes only took effect in CY 2018...

Section 168(k) was amended to provide that beginning with assets purchased after September 27, 2017 -- so yes, this is RETROACTIVE to September of this year -- the bonus depreciation percentage becomes 100%. Because this rule is an expansion of the bonus depreciation provisions, in order to wield the 100% expensing rules correctly, we must understand what is required in order to claim bonus depreciation under the new law.

per Forbes and others

 

[mongo]

@Harlam
From same article regarding 179 vs bonus:

It would behoove you, then, to opt instead to purchase an SUV or truck that weighs more than 6,000 lbs and thus escapes the luxury auto limits. Because with 100% expensing back, the full cost of an SUV or truck will be IMMEDIATELY DEDUCTIBLE in year 1. Remember, it is only Section 179 that limits the first-year deduction of an SUV to $25,000; for bonus depreciation, the limit was always just the applicable percentage under Section 168(k), which had been 50%, but is now going to 100%. Thus, a taxpayer who purchases a $60,000 Canyonero in 2018 would be entitled to deduct the full cost of the SUV, while someone who purchases a vehicle weighing less than 6,000 lbs will be capped out at $18,000.

 

[MelaniainLA]

Sounds like your "CPA" didn't understand that the tax law changes only took effect in CY 2018...

See @mongo -- changes for bonus depreciation (applies to cars) RETROACTIVE to mid September 2017! BOOM!

 

[Harlam]

Hi everyone, thanks for all the feedback. This really helps provide valuable information about our purchase decision. Reading through the section 179, the wording and rhetoric leaves some gray zones. I do have an appt with another CPA this week, so I'll get another "professional" opinion, but at least I have some more information to go over with them.

 

[Xenoilphobe]

Hi everyone,

As some of you are aware from previous threads here and on Forums and Reddit, because the Model X has a weight (GVWR, which is printed on a sticker on inside of frame on driver's door) of greater than 6000 lbs, it qualifies as a commercial heavy-duty vehicle, not as a passenger car. As a result, IF YOU TAKE DELIVERY (not place order but actually RECEIVE and USE the car) in 2017 (even as late as December 31, 2017), you get to depreciate a massive amount of the car's purchase price.

There is a great article at: Section 179 Vehicle List: Deductions For Heavy Vehicles

There are more articles on this at: Tesla Model X GVWR Is 6,768 Pounds - Vehicles Qualifies For $25,000 Business Tax Deduction and The tax loophole that can save you big bucks off a Tesla Model X

The Model S is under 6000 lbs GVWR, so it doesn't qualify.

Per the article:

"
You can obtain a substantial first-year deduction if your business car isn’t a “passenger vehicle.”

Example: Sheila pays $100,000 for an SUV [Average price of a Model X] with a gross loaded vehicle weight of 7,000 pounds. Because it weighs more than 6,000 pounds, it is not a “passenger automobile.” Yet, it is subject to the $25,000 limit on the Section 179 deduction for SUVs. Terry uses the SUV 100% of the time for her travel guide business. She may deduct the following amounts for 2014 [holds true for 2017 as well, when the 50% bonus depreciation will cease to exist]:

Section 179 Deduction $25,000
50% Bonus Deduction $37,500 (50% of the $75,000 basis)
Regular Depreciation $7,500 (20% x %37,500 remaining basis)
Total $70,000

Terry can depreciate the remaining $30,000 of the $100,000 over the next several years using regular depreciation.


This seems like a great deal for people who want to buy heavy (and expensive) SUVs. Keep in mind, the deduction is proportional to the amount of time you use the vehicle for business. If Sheila used the SUV 40 percent of the time for personal, she’d only receive a $42,000 deduction for the year.

To qualify for the Section 179 vehicle deduction and bonus depreciation, you must use it for business more than 50 percent of the time. This is true for the full five-year depreciation period that applies to vehicles. If your use dips below 50 percent during any of that five-year period, you’ll have to repay your deduction and bonus depreciation. That’s why it’s vital to track your business mileage, no matter what method you’re using to take a deduction."


I called my tax attorney and was told that if I take delivery near the end of 2017 and am careful to use the car SOLELY for business use, as a small business owner, I could legally take 100% business use on my taxes, or reduce that perfecta accordingly if I do use it for personal things here and there.

So if you're on the fence, this is a great time to order it because you would need a couple months of lead time to receive the car (unless you purchase Inventory car) and of course some time to consult your tax adviser. You'll get yourself (rather, your business) a nice Christmas gift, save on gas and maintenance, and enjoy the thrill of a Tesla.

Happy to discuss with anyone -- you can PM me here or email me hdhemmati at gmail dot com. And also happy to privately send you a referral code if you need one, and can introduce you to an all-star OA here in Los Angeles area who can help you find the ideal Model X. Happy shopping!

Sounds like a great deal for an uber driver

 

[Xenoilphobe]

I don't think of it as a loophole. Loophole is as overused as cusswords; the word no longer has real meaning. I think of it as a law that was deliberately written with the intention of being misused by the politicians and other white collars as well as professionals to misrepresent what a true work vehicle entails as opposed to a passenger car. If it didn't have an available Work version or is not sold by commercial truck dealers, it's most likely a passenger car, not a real work vehicle bought for the daily needs of a business.

Sort of like how politicians write laws that exempt politicians. Or vote for their own salary increases. Legal but morally bankrupt. A demonstration of what politicians think of taxpayers.

IMO, this is not partisan politics. Both major parties are corrupt at their foundations and need to be torn down. When fresh blood enters the mix, the hordes of self-serving existing politicos make it impossible for them to change anything.

The idea that people other than themselves would misuse the law also was of no concern, since it all they care about is their own personal wealth.

IIRC, we used this law? But an E350 can be loaded with forklift and haul a 15 foot forging that weighs over 2500lb. And it can seat 15 people if required, and was under $40k. Not exactly an luxury SUV that holds 7 'friendly' people. In fact, it only had seating for more than 2 when required to assist the schools after buses became unavailable so the school staff could have more days off.

I agree with elements of your arguement. If you think this is bad you should see the legalized rackeeting that goes in in Defense contracting with “Alaskan Native Corporations”.

Former Native corporation exec alleges 'sham companies' get government contracts