Personal versus business car

Mazy_IHB

Mazy_IHB

New member
Hi,



My CPA is away for a couple of days with no backup coverage, so I'm on my own on this and appreciate all opnion:



I'm buying a car for part personal and part business use (a run-of-the-mill SUV at ~$35k). In order to take tax deductions (depreciation and operating costs), will it matter if I buy it under my own name or my business name? I checked my insurance agent and she said the insurance premium won't change much. Are there other extra expenses associated with having a car under business as opposed to individual?



Thanks!
 
[quote author="Mazy" date=1248151940]Hi,



My CPA is away for a couple of days with no backup coverage, so I'm on my own on this and appreciate all opnion:



I'm buying a car for part personal and part business use (a run-of-the-mill SUV at ~$35k). In order to take tax deductions (depreciation and operating costs), will it matter if I buy it under my own name or my business name? I checked my insurance agent and she said the insurance premium won't change much. Are there other extra expenses associated with having a car under business as opposed to individual?



Thanks!</blockquote>


I own my personal/business vehicle, but I expense everything I do with it via my business. My personal usage is less than 5%. I don't know if it's right but that's how I do it.
 
[quote author="Mazy" date=1248151940]Hi,



My CPA is away for a couple of days with no backup coverage, so I'm on my own on this and appreciate all opnion:



I'm buying a car for part personal and part business use (a run-of-the-mill SUV at ~$35k). In order to take tax deductions (depreciation and operating costs), will it matter if I buy it under my own name or my business name? I checked my insurance agent and she said the insurance premium won't change much. Are there other extra expenses associated with having a car under business as opposed to individual?



Thanks!</blockquote>
Very good question and one that I looked into closely before I bought my second car. I will be using the second car for my business uses (realtor and consulting work) and claiming 80% of the use as business use. As such, I would be allowed to expense 80% of the cost basis of the car, 80% of the expenses (insurance, reg, repairs, etc), and all of the mileage I incur for business use. It will be more advantageous for me to use the MACRS depreciation schedule for the cost basis of the car I can expense instead of taking a Secion 179 deduction. All that being said, there should not be any extra expense with having the car under your business name instead of your name.
 
</blockquote>
"As such, I would be allowed to expense 80% of the cost basis of the car, 80% of the expenses (insurance, reg, repairs, etc), and all of the mileage I incur for business use"</blockquote>


Arent you double dipping if you deduct the mileage? You are already deducting 80% of the cost of the car, then 80% of the expenses, of which gas is presumably one of them? When a business deducts the cost of the car they dont deduct the mileage as well.
 
[quote author="qwerty" date=1248154874]</blockquote>
"As such, I would be allowed to expense 80% of the cost basis of the car, 80% of the expenses (insurance, reg, repairs, etc), and all of the mileage I incur for business use"</blockquote>


Arent you double dipping if you deduct the mileage? You are already deducting 80% of the cost of the car, then 80% of the expenses, of which gas is presumably one of them? When a business deducts the cost of the car they dont deduct the mileage as well.</blockquote>
You are correct that it would be double dipping if you expenses the repairs and maintenance AND the mileage because the mileage is supposed to include a repairs and maintenance component. You can either take the mileage expense OR the actual gas + repairs + maintenance cost (whichever is higher). However, you can deduct costs such as insurance, registration, etc in addition to taking the mileage deduction because those costs are incurred whether you drive the car or not (you can call them your fixed costs of ownership).
 
It makes no difference in what name you buy the car for purposes of expense deduction. The percentage use for business is determined by the percentage mileage used for biz. There are no other methods for calculating business use acceptable by the IRS.



If you opt for the mileage deduction instead of actual cost deduction, you may not deduct insurance or registration separately on the business portion of the deduction. The personal portion of the license fee portion of the registration is still deductible as a personal tax.



If you opt for the mileage deduction you may deduct tolls and parking fees separately.
 
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