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Old 11-30-2004, 11:52 PM
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muddstopper muddstopper is offline
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Join Date: Dec 2002
Location: transition zone
Posts: 2,343
Basicly it lets you turn your monthly truck payments into a business expense that is tax deductable for the business. Problem is that you also have to report the lease money you would recieve as personal income. That would mean having to pay taxes on your truck payment. I invested my truck in my company. This would be considered a capital investment, same as cash. This way my company is paying for the truck and paying me back for my initial investment. Since I am just recoupeing my initial investment I dont have to pay taxes on the money recieved. Since my company is paying for the truck it becomes a business expense that is tax deductable. The company is also taking depreciation on the truck. Once the truck is paid for and fully depreciated, I can buy the truck back from the company at a lower price if I choose to, or the company can sell the truck or use it as a tradein for a newer truck. If I buy the truck back the purchase price of the truck will be reported as recouped income,(residual value), for the company but, since the company would set the price the amount recouped can be set pretty low so as to limit the taxable amount. If the truck is traded for a new one, the trade in value becomes the residual value and will affect the depreciation value of the new truck.
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