I am wondering if any one has any experience they can pass off about using a HAMB worthy truck as a shop truck and what deductions can be taken? can any value be written off? I am thinking about purchasing a truck that can be used as a advertising display parked in front of the shop and driven on a regular basis as "advertising" but don't know what advantage there is for my business to buy rather than personal?
I'm guessing your accountant can help you with the tax deductions but there is also down sides to having it associated with your business like any other company cars and trucks. HRP
I always claim "mileage" irregardless of what type of vehicle you use for business. You can claim maintenance costs or mileage. It's easier to just do your miles in my opinion. For 2015 it's 57 and a half cents a mile. 30,000 miles would be a 17,250 dollar deduction for the year. Mileage log, and gas receipts are your number one back up ... in case you are audited. As well, I refer to Danny's post above. If in doubt, ask the accountant.
It's a funny thing with the insurance company. You put you company name on a vehicle and the price of the policy gets nuts. If you don't tell them you have your name on it and something happens to it, they won't pay. I find it a bit odd but they claim lettered vehicles get into more claims by a large margin. Back to the original question. Talk to the accountant. He will tell you if it is something that is good for you as far as taxes. Also understand that most accountants are really not good "businessmen" (In my opinion). You need to advertise a business to make money, they will tell you it is wasted money because it is gone once you spend it and have no way to really show what it did for you.
With a business under the proper tax structure anything that you buy is a write off. The bussiness just needs the money to buy it and have a business related purpose for it. You could sponsor or campaign a TF/FC and write it off- or a Lear jet or an old pick up truck. Every single hard asset gets a paper depreciation schedule. However its pretty hard to depreciate an already obsolete vehicle. Insurance policy will cover that situation accordingly and that premium is also a write off.
That's because lettered cars are driven by employees and employees don't take the same care as an owner of a vehicle does. If a vehicle is mostly parked as a way of advertising a business I would have to make the assumption that advertising costs could be applied but it is a question for a CPA I suppose.
As stated you can claim mileage or costs but if you are just parking it as advertising it would be the equivalent of a sign. Remember you cannot claim both mileage costs and claim depreciation, and a parked ad gets no mileage. Many business's around here have bought trucks to put their name on and park where zoning restrictions will not allow a large sign.
You need to talk to a CPA that will show up at an audit if need be. The advice on the HAMB (including mine) is worth exactly what you're paying for it!
Talk to a CPA before making decisions about tax issues. Now that I said that, if you use it for business and fully depreciate it, when you sell it you will be taxed for the entire sale price as a profit.
This and the fact that if something bad happens lawyers see deep, or at least deeper, pockets to pick.
For twenty four years I was President of a corporation and my wife and I were sole stockholders. I ran about twenty trucks at all times ranging from tri axle Petes to Ford Rangers. Most were lettered. I had trucks in very,very minor accidents where there were obviously and absolutely no injuries UNTIL THE OTHER PARTY SAW LETTERING or spotted the company name on the registration.. The public, in general, has been brainwashed into thinking that all businesses are price gouging demons. They don't see all the backdoor taxes and overhead placed on businesses by government and want blood. Having said that, all my trucks, parts, maintenance, lettering, speed parts, etc was covered as a legitimate business expense. Mileage was not a factor. That only comes in when you use a personal vehicle for some business. I would strongly suggest that anyone using a vehicle in their business, or just being in business, incorporate under one of the various Limited Liability corporate options. Anyone not incorporated is fair game to have the sharks come after their home and anything they might own now or in the future. Filing as an LLC limits liability to the assets of the company. There are ways the sharks can "pierce the corporate veil" but that's usually because the LLC did not keep up the paperwork and requirements of an LLC. No big deal or expense. In plain language: treat it like a real company or the sharks will say you weren't a serious LLC. We just had an attorney (retired judge) and an Insurance Specialist address our car club regarding the need for this protection for the club as well. Law suits got so bad that non profit charities were having trouble getting volunteers for fear they'd be sued and volunteers were afraid to jeopardize their homes. The Federal Government passed the Volunteer Protection Act in the nineties to help alleviate the situation and limit liability to the organization's insured amount (Car Clubs note the insured part). Check your State to verify info and keep in mind that judges and politicians often ignore the law, right up to and including the President and Supreme Court.
There's differences from state to state, but you might just lease the use to your company. It's also true that once it's lettered the dangers grow larger. Mileage is a good idea. Keep it for yourself and use it for work, just log your miles. Want it lettered? A magnetic sign while it's sitting in front of your place, take it off when you leave. Depending upon what it is and what you really do it may not need lettering. Some cars and trucks always attract attention. We've all seen the old Model T sitting out front or on the roof of places, right? My A pickup draws tons of attention with no advertising on it, and frankly I don't want it for that use at all. It's mine. I'll never move it over as a corporate asset, never use it in a commercial fashion. If I drive to work now and then and it draws attention (proper attention), well all the better. Sage advice on the LLC too. Look into it seriously. It cost me $400 to cover my ass that way.
If you were to use a company vehicle(hamb friendly or not) for personal use,the IRS considers this as a form of income and for you to report it. Tax laws for company vehicles are the same, hamb friendly or not.
I've had a LLC for a few years, they really are the way to go. I set it up when I use to race every weekend & pondered the possibilities of lawsuits if someone was injured at or going to & from the track. Also when I started placing in the top finishing cars for the night I earned a W2 form from the speedway. To me llc's offer way more protection for lawsuits. Every year I pay a $150 buck state franchise tax. I'm sure every state is different. It is a great way to separate the hobby from the business & family & allows one to benefit from a legal way to use tax deductions for advertisement, etc. The main idea is if something happens you can at least keep the shirt off your back. Flux
I don't know about now but when I last used my own vehicle for business purposes I went with mileage instead of total cost, all I had to do was just not log personal miles as business miles.
If you are using your truck for advertising and it is permanently lettered, it is working even when you use it for personal use and should still be considered a 100% business expense. In my case I was in an emergency service business and on call 24/7 as well which makes it 100% business expense. Does your Rod Shop or whatever do Road Service?
Don't know if this is germane to the question but exterminator Truly Nolen has hundreds of old cars which he has been using as advertising since the fifties and he wrote off ALL OF THEM. He would park them around at gas stations with his name and phone number on the door and that was his advertising. He got into various legal hassles but fought them all and won.
Why not get a set of removable sign boards to go on the bedsides? Park it out front, when you want to drive it, take them off. Maybe skirting the rules a bit, I don't know.....
The Jalopy Journal
