Starting LLC to get $7500 business tax incentives

[aswa]

Plan to get a cyberbeast but since it is above $100,000 I wont qualifyu for $7500 tax credit, but if I have a business busibness I will qualify, So i plan to start llc , IS IT WORTH IT?

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[cyberic999]

Don't think you need an LLC to qualify as a business. I'm also in a similar line of thought to get the credit lol Following this thread to hopefully get some advice!

 

[mongo]

You don't need an LLC (may depend on the state), but you do need business income. It's a credit against your business specific tax bill. Even then, there is a minimum business tax rate than can kick in resulting is a portion carrying forward (or back) as a general credit.
I am not a CPA, this is not official advice.

 

[PungoteagueDave]

Plan to get a cyberbeast but since it is above $100,000 I wont qualifyu for $7500 tax credit, but if I have a business busibness I will qualify, So i plan to start llc , IS IT WORTH IT?

LLC isn't necessary. It can be a Schedule C (personally owned) business, or a partnership - basically any pass-through business. However, to take the credit, you must have declared revenues and taxable net income from the specific business to which you attribute CT ownership. Any NONE the use can be for personal driving - documented via a log for every mile driven. Not even a stop-off for groceries, or any commuting usage. I am a non-practicing CPA, take this for face value and verify with your tax consultant.

 

[mongo]

LLC isn't necessary. It can be a Schedule C (personally owned) business, or a partnership - basically any pass-through business. However, to take the credit, you must have declared revenues and taxable net income from the specific business to which you attribute CT ownership. Any NONE the use can be for personal driving - documented via a log for every mile driven. Not even a stop-off for groceries, or any commuting usage. I am a non-practicing CPA, take this for face value and verify with your tax consultant.

The threshold of business use under 45W seems to be much more accommodating than the requirements for bonus depreciation.

Q9. How does a taxpayer determine if a vehicle is used in a “business use”? (added Dec. 29, 2022)

A9. Generally, the term business use means any use in a trade or business of the taxpayer.

https://www.irs.gov/newsroom/topic-...-qualified-commercial-clean-vehicle-credit#q9

 

[carsly]

Why not just lease and take the pass through? sure, you lose about $1k in lease initiation and termination fees but far cleaner from a tax perspective if you don’t actually have a business.

just a question, not tax advice

 

[VAF84]

Yea, you need the the tax liability for the tax credit to offset. At least my understanding. Just like the personal credit, if your liability is less than $7500, then you wouldn’t get the full credit. Therefore, my understanding, if you made zero sales, hence zero income, hence zero tax to pay, then no way to reduce it by $7,500.

Regarding use case, I don’t know. I have an S-corp and deduct business mileage that I track carefully. CPA is fine with it. However, in my case I have a ton of unquestionable biz miles that couldn’t be confused with personal in an audit. Comes with report showing start and end locations for all of them.

 

[mongo]

Why not just lease and take the pass through? sure, you lose about $1k in lease initiation and termination fees but far cleaner from a tax perspective if you don’t actually have a business.

just a question, not tax advice

Sadly, Foundation Series aren't available for lease. It's a good option for higher trim non-FS.

 

[mongo]

Yea, you need the the tax liability for the tax credit to offset. At least my understanding. Just like the personal credit, if your liability is less than $7500, then you wouldn’t get the full credit. Therefore, my understanding, if you made zero sales, hence zero income, hence zero tax to pay, then no way to reduce it by $7,500.

Regarding use case, I don’t know. I have an S-corp and deduct business mileage that I track carefully. CPA is fine with it. However, in my case I have a ton of unquestionable biz miles that couldn’t be confused with personal in an audit. Comes with report showing start and end locations for all of them.

Yah, and the IRS business milage rate includes depreciation.

 

[PungoteagueDave]

The threshold of business use under 45W seems to be much more accommodating than the requirements for bonus depreciation.

Q9. How does a taxpayer determine if a vehicle is used in a “business use”? (added Dec. 29, 2022)

A9. Generally, the term business use means any use in a trade or business of the taxpayer.

https://www.irs.gov/newsroom/topic-...-qualified-commercial-clean-vehicle-credit#q9

I think you are correct. Incidental use may be permitted, albeit not typical under IRS vehicle writeoff rules.

 

[mongo]

I think you are correct. Incidental use may be permitted, albeit not typical under IRS vehicle writeoff rules.

Yeah, it's really atypical, but seems very permissive.

 

[Cybertruck 1974]

7500, nope, but i got 77k back against income tax! Winner!!

 

[LJ Wilson]

I think it also has to be used more than 50% for your "business".

 

[mongo]

I think it also has to be used more than 50% for your "business".

To claim depreciation, yes. To claim the credit, no.

 

[aswa]

7500, nope, but i got 77k back against income tax! Winner!!

how is it possible?

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