can you "write off" your ferrari?

I write my 360 off. Used to take clients to lunches, travel back and forth to work etc. My CPA said it was no problem.

Mike

 

If the car is company owned or used in a business, it can be depreciated based on its usage. Your tax accountant should be able to advise you as the the appropriate amount of depreciation you can claim against your business income. Bear in mind however that depreciation reduces your balance sheet value attributed to the car and a sale in the future will attract taxation on the difference between the depreciated value or basis and the actual selling price. The rate of tax on "recaptured" depreciation is higher than capital gains tax but lower than ordinary income tax, assuming you are in the highest bracket and that your company income filters down to you through a non taxable entity like a limited partnership, LLC or Sub Chapter S corporation.

 

Use an home equity line to pay for the car and then write off the interest expense. You can pretty much do anything but will it fly if you get audited?

 

What IRS agent is going to approve of that one? BIG flag.

Buy it, own it, crash it, then it's a write-off.

--Dan

 

Why do you suggest using a home equity line? Best rate?

 

DOes this mean a new F430 makes u pay MORE taxes yearly as the value shoots up initially lol.

 

your gonna get an ass kicking when / if you ever get audited.

 

Don't any of you guys hit the amt???!!! I would think that for most this is a moot point. Or am I misunderstanding this???

If you fall under the AMT, and then your LLC gets more write offs (building depreciation, cars, etc) - do you actually get the write off? Or does the AMT make it pointless???

 

an llc is it own entity with revs-exps and a p/l that flows to the members. there are no amt adjustments.

 

I understand that...

Lets think in hypotheticals...

You as an individual make 100,000$ per year in personal income, and fall under the AMT. So, you are now no longer privy to some tax write-offs.

Now you form an LLC, which holds tons of property. Of course this is all depreciated. Lets further assume you had MASSIVE repairs, and your llc lost $100,000 on paper. Of course paper losses are rarely actual losses, but include depreciation, repairs, closing costs, etc...

So, do you now owe tax on 0$ (ie. 100,000$ personal income - $100,000 flow through loss????)?. Or do you still owe the AMT on the 100,000$, and your paper losses don't count now....

I suspect it is the latter...but not sure...

 

Probably not now. But, you may be able to write off that interest expense. Plus you can pay it down when you sell or for any reason. Check with your tax adviser, blah, blah, blah.

 

Gordon,

Since you share the same home town... I have the best Accountant in Cincy if you want to use him - he can answer this question for you.

PM me and I will give you his name and number!

Rich

 

u use net income. so if had a job making $100k yr and my llc had a ($100k) earned income loss than my income would be zero.

 

Well, thats sounds great to me!

If thats the case, I will likley owe little income tax this year. Which I find very hard to believe. .

Gutting and rehabbing buildings provides for HUGE paper losses. "Repairs" on a building can easily reach 200k plus...

And of course "improvements" are multiples of that...

HMM...interesting...

 

those may or may not be considered losses, sounds like capital improvements to me which will be depreciated over X years......

 

Henryr, 80% of it is improvements, but 20% is easily repairs:

Repairs:

Demolition
Carpentry to straighten floors, stairs
tuckpointing
refuse disposal
glass repair

Other immediate write off's:

Professional fees (accountant, lawyer, architect ($$$$))
dumpsters
permits
closing costs
fees
points
surveys

Easily adds to hundreds of thousands of dollars...

Capital improvements:

new roof, plumbing, electrical, walls, drywall, windows, landscaping, etc, etc.



Any rehabbers care to chime in???

 

bpu699 :
I'm not an accountant, but have learned to love real estate come tax time. Without knowing anything about your overall financial picture, from what I have read about your rehab building, you are going to love your tax return next year. If you sell that builiding, however, that capital gain is going to be massive....................

 

Wolfgang, the capital gains tax is only 15%... . My personal tax rate, is, unfortunately...WAY higher. Plus, I can Starker exchange the properties indefinitely and not pay capital gains... God love capitalism.

 

I believe you write off interest paid up to $100,000 if you use your home line of credit. Thus if the car cost $200,000 and you pay for it using your home line of credit, the interest on the first $100,000 would be deductible. Interest paid on the second $100,000 would not be.

BTW does anyone know if the taxpayer for Y2005 can still choose between deducting state income tax or state sales tax? In Y2004 you had the election.

 

i think that was a one year freebie.

 

Somebody said a few posts earlier: "RED FLAG!!!!"

You may never get audited, but if you do, it will not be worth the cost and/or hassle. Most IRS auditors have seen it all. Best you could hope for is a rookie auditor, but don’t count on that. Not for me, don't need that aggravation in life. Been there, good luck.

 

Here's another way to write it off:
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