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I'm considering buy a new truck ...tax write off issues....pros vs. cons?

Discussion in 'Business Operations' started by Exact Rototilling, Nov 17, 2009.

  1. Exact Rototilling

    Exact Rototilling LawnSite Fanatic
    Messages: 5,378

    I typically prefer to find used vehicles but all the hunting and searching for good one is a huge time burning PITA so with that in mind ...as much as I hate debt and paying interest charges [currently no debt] I'd rather pay that penalty vs. chasing down nickel and dime issues with used.

    Some of you have done this before....looking back how would you of handled it differently for the highest possible tax deduction?

    I don't have an accountant....I use turbo tax schedule C.
  2. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Messages: 2,524

    Even when I was a sole proprietor, I depreciated all my trucks. Here's a few things I know although I'm no CPA.

    1. You can either depreciate or use mileage. If it's a new truck, you'll probably do better with depreciation. If it's used or you keep a vehicle for a very long time, mileage may be the way to go. You can't do one way with a vehicle and then change it to the other. You can depreciate one while using mileage on another, though.

    2. Either way, you have to track your mileage. When depreciating, you track all your expenses with that vehicle and when the year ends, you get to deduct the percentage of the expenses that were also the percentage of business miles used. In other words, if you drove the truck 7000 miles business and 3000 miles personal, you get to use 70% of the truck's expenses as deductions.

    3. I "think" you get to still depreciate a large portion of the truck's value the first year. If you're looking at a large tax liability this year, a new truck will certainly help offset that.

    I'm sure others will chime in on this. Also, it might be time to start looking at a CPA. Mine charges me $400-$500 per year for my taxes and he's worth every penny.
  3. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Yeh, I'd rather drop $5,000 into a standard IRA for a deduction...
    Now whether you can have both a Roth and a standard, that I couldn't tell you.

    But by the time you're done paying the extra insurance?
    Because so long you have a loan on a vehicle, you HAVE to carry full coverage.
    Unless you were planning on buying it cash...

    Don't forget the property tax will get ya.
    And like the man said, all the extra paperwork tracking the expenses...

    If you gotta have it LOL
    It will be good for deduction purposes for some years to come, with depreciation and all.

    All things considered?
    I still don't think you'd come out ahead no kinds of way thou.
    Last edited: Nov 17, 2009
  4. punt66

    punt66 LawnSite Fanatic
    Messages: 8,536

    i only buy new. Business expense and my as$ thanks me everyday.
  5. Littleriver1

    Littleriver1 LawnSite Senior Member
    Messages: 811

    Sounds like some one Thinks he needs a new truck, but will find he only just wants one.
  6. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Messages: 7,670

    Lawnspecialties is essentially correct. A couple of things to keep in mind: 1. if you use section 179, you cannot use the standard mileage rate. 2. You can change from the standard mileage rate to the actual expense method any year but you must use straight line depreciation. 3. Most important, if you don't use the standard mileage rate the first year, its not available in any subsequent year. There is a qualified motor vehicle deduction (sales and excises taxes) available for certain vehicles purchased between 2/17 and 12/31.
  7. Caterkillar

    Caterkillar LawnSite Senior Member
    Messages: 995

    I prefer to pay some taxes and build net worth. I buy everything used. You can get a VERY nice truck for 15k.
  8. punt66

    punt66 LawnSite Fanatic
    Messages: 8,536

    i bought mine new for 23k! With 8 miles.
  9. Exact Rototilling

    Exact Rototilling LawnSite Fanatic
    Messages: 5,378

    Thanks for all the input everybody.

    Well if you saw my truck you'd understand. It's an 1985 Toyota Extra Cab solid front axle 4x4 with a 5 speed with 4 cylinder barely 100 hp. I'm the original owner FWIW. It's in fairly decent shape but is one of least valuable assets I have in the business. I have a nice lettered grass graphic enclosed 6 x 12 trailer and I pull it with this old Toyota 4 banger.

    I drive it full throttle 3rd and 4th gear on the freeway due to wind resistance. :hammerhead:

    It does fine in town but anything over 55mph is a PITA. My back up tow rig up is a pristine 1991 4runner with a V6. Both vehicle are already on my tax returns for mileage. I've kept track of gas, repairs and expenses but mileage always works to my advantage.

    Based on what I really need I'm going to look for a used T100 3.4 V6, Tundra V8 possibly a domestic half ton. for under $12k. If I expand the business model in 2 years I will breakdown and get a 3/4 ton so based on that it makes little sense to take beating on a NEW half ton on trade in or on resale.
    Last edited: Nov 27, 2009
  10. Caterkillar

    Caterkillar LawnSite Senior Member
    Messages: 995

    I like your plan!! Sounds like you have a good head on your shoulders.

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