Tax Deduction Corporation Question?
Posted on June 2, 2009 by admin
dsert_fox asked:
If you buy a car that’s $300,000 for your corporation and you pay it cash from the corporate account, can you deduct that as an expense, or is it better to lease it, write off the lease, or use a loan and write off the interest?
If you buy a car that’s $300,000 for your corporation and you pay it cash from the corporate account, can you deduct that as an expense, or is it better to lease it, write off the lease, or use a loan and write off the interest?
A $300,000 car? Wow, that must be quite a car!
(Assuming you are in the USA): Generally, if you purchase business equipment (including vehicles), it must be depreciated (expensed) over the useful life of the vehicle. That “lifetime” is set the by IRS.
Small businesses can immediately expense up to $125k per year (there are rules regarding this). It’s called “Section 179″ deduction.
The question as to whether to buy or lease depends on several factors, so try one of the many “Lease vs Buy” calculators on the Internet.
Sorry, but if your corporation is buying 300K vehicles then run this by the corporate tax Atty! Color me skeptic!
there are limits as to taking depreciation on a luxury vehicle, which at $300,000 it would be. Better off leasing the vehicle.
An asset of that amount would have to be amortized over the life of the asset. To be sure, see a corporate tax attorney.