Hummer Tax / Sect 179 Deduction Anyone?

[M0unt41nm4n]

I was just going to add this… My real estate company S corp which I am the only owner of bought the CT. End of they day the Gov’t will pay for between $40-50k of the truck.

Yeah I have an s-corp also. But it already owns my 2 Fords and I don’t want to get flagged for too many vehicles. I have a call into my accountant to see if I can loop hole it where the business buys it, so I get the 7500.00 pass through tax credit then gift it to myself as a distribution (kind of I loan the company personally to buy it), then put it back in my name as a loan payback. If I do that it makes me wonder if that will trigger Tesla’s no sale clause, even though it’s just me still. It gets complicated.

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[The Tumbler]

Yeah I have an s-corp also. But it already owns my 2 Fords and I don’t want to get flagged for too many vehicles. I have a call into my accountant to see if I can loop hole it where the business buys it, so I get the 7500.00 pass through tax credit then gift it to myself as a distribution (kind of I loan the company personally to buy it), then put it back in my name as a loan payback. If I do that it makes me wonder if that will trigger Tesla’s no sale clause, even though it’s just me still. It gets complicated.

interesting thought. Isn’t Tesla not pursuing the no sale clause?

 

[M0unt41nm4n]

interesting thought. Isn’t Tesla not pursuing the no sale clause?

Yeah… but I want to be up front about it. I don’t mind letting them know I’m trying to use a legal tax loop hole to get the credit.

 

[X-Press-O]

One more advantage... you get to take the full $7500 EV credit from the Feds for the Commercial Clean Vehicle credit. There is no income or MSRP that applies when its purchased by a business ;-) That's a nice pass-through to you on a small business since you are a LLC.

https://www.irs.gov/credits-deductions/commercial-clean-vehicle-credit

Oh wow! Thank you for this information. First I have heard of this credit.

This is basically the same $7,500 personal use credit without the $80k purchase cap that disqualifying the CT under personal use.

$7,500 for vehical under 14,000 & I'm assuming above 6,000 (commercial qualification)

$40,000 credit for vehicles over 14,000, hummm the tesla electric Semi tractor starting at $150k. Me thinking if I need one Ha!!

 

[X-Press-O]

We live down here in Parrish, FL. Have a lawn care business and my wife and I are both real estate agents. We spend about $500 a month in fuel right now with our F150 but that cost will go up as we grow our businesses. Didn’t spend enough last year from our business account. This year we will be writing off everything 100% from the toilet paper to the Cybertruck. We use our home for business location. She will be getting 100% VA disability soon so no property taxes and no Private mortgage insurance. ?

Best of luck I also have the 100% VA,you will get DV plates this also qualify for free airport parking, benfit I use all of the time.

 

[X-Press-O]

I was just going to add this… My real estate company S corp which I am the only owner of bought the CT. End of they day the Gov’t will pay for between $40-50k of the truck.

From my understanding if we're using an LLC that section you circled only applies to the business earnings, it cant touch our personal earning.

after business deduction if we owe at least $7,500 in business taxes then the $7,500 credit is a direct tax credit. But that's not accounting for the additional Sec 179 credits which can also be applied.

 

[X-Press-O]

I think Lyft and Uber drivers can use it no? Way more than 50% of my miles go toward business.

That for sure should work for Lyft or Uber you can for sure deduct your expenses. Either the standard mileage deductions or Itemized. If your using the CT (or any above 6,000lbs vehical) in addition you can apply the Sec 179 deductions. Then if is a clean electric vehical (over 6k lbs) you get the extra commercial clean vehicle $7,500 credit.

But both are "credits" you can't receive more credit then your business pays in taxes, in other words the credit is not a refund. I do believe your able to carry over unused credits over to the next year. Im not a tax guy, I may be wrong but this is how I understand it.

 

[The Tumbler]

From my understanding if we're using an LLC that section you circled only applies to the business earnings, it cant touch our personal earning.

after business deduction if we owe at least $7,500 in business taxes then the $7,500 credit is a direct tax credit. But that's not accounting for the additional Sec 179 credits which can also be applied.

From my understanding if we're using an LLC that section you circled only applies to the business earnings, it cant touch our personal earning.

im not sure what you mean by can’t touch the personal earnings. If it’s titled and purchased by the business there is no income cap, which I would assume would relate to the business income. The credit needs to be taken on the business tax return

after business deduction if we owe at least $7,500 in business taxes then the $7,500 credit is a direct tax credit. But that's not accounting for the additional Sec 179 credits which can also be applied.

yep, that’s my understanding.

 

[M0unt41nm4n]

From my understanding if we're using an LLC that section you circled only applies to the business earnings, it cant touch our personal earning.

after business deduction if we owe at least $7,500 in business taxes then the $7,500 credit is a direct tax credit. But that's not accounting for the additional Sec 179 credits which can also be applied.

It's a tax credit. So it goes against business income. LLC and S-corps require Form 8936 which shows the credit come off your business income and it gets reported on your schedule K (see lines 19,20, and 21 - Part V - Notice as a business you don't fill in Parts II, III, or IV... only I and V). Gotta love passthroughs

https://www.irs.gov/pub/irs-pdf/f8936.pdf

Be sure you claim it as 100% and you get the $7,500.00 as long as your business showed that had incomeincome.

As long as the IRS sees your company name on the bill of sale, you get it unless you are operating at a loss. Then it will get carried over to successive years.

 

[X-Press-O]

It's a tax credit. So it goes against business income. LLC and S-corps require Form 8936 which shows the credit come off your business income and it gets reported on your schedule K (see lines 19,20, and 21 - Part V - Notice as a business you don't fill in Parts II, III, or IV... only I and V). Gotta love passthroughs

https://www.irs.gov/pub/irs-pdf/f8936.pdf

Be sure you claim it as 100% and you get the $7,500.00 as long as your business showed that had incomeincome.

As long as the IRS sees your company name on the bill of sale, you get it unless you are operating at a loss. Then it will get carried over to successive years.

What about when in regards to insurance?
Must you have "commercial" insurance or can you get away with adding it to your personal policy?

More so if your using it within the 50%- 100% window for business. For 100% use qualification im assuming you must have commercial insurance.

 

[M0unt41nm4n]

What about when in regards to insurance?
Must you have "commercial" insurance or can you get away with adding it to your personal policy?

More so if your using it within the 50%- 100% window for business. For 100% use qualification im assuming you must have commercial insurance.

I can't comment too much on that except all my trucks are insured in my name, not the business. Remember, you can title the trucks as "Your business name OR you" ... as in exactly with the word OR in it. Then you can do things like get special plates (I was a FF for many years so I get FF plates on it - helps on getting out of tickets ) and your insurance company shouldn't complain. Mine didn't. I'm guessing that if it was 100% in the business name, it may cause problems. But remember, General Liability has add-on commercial auto which I have to say is a lot cheaper than personal... but I don't really know the nuances and how that coverage works.

We don't actually claim 100%. We claim 80-90% business on our vehicles. Unless your truck has the business name plastered on it and it looks like a true work truck, I would be cautious about claiming 100%. You may get away with it, but a luxury truck at 100% businss may be a red flag and you would need to prove its 100% business. The IRS may actually ask for drive/mileage logs etc (are you using it to go to the grocery store, etc). I'm just repeating what my accountant told me... so YMMV.

PS: I want to clarify that for me, I wasn't going to section 179 it. I wanted the business to buy it then it comes to me personally as a distribution. So I claim 100% on it and then give it to me after the sale. That allows me to leverage the $7,500.00 loop hole on the passthrough with no MSRP or income limits.

Tax code sucks... we have to dance to actually get the credit.

 

[jcryer3]

The better way is to lease your vehicle to your business. You cannot use 100% since it will be also used for personnel use. So 60% business and 40% or 70% business and 30% personal is a good ratio. Your business then deducts all the expense, depreciation (which is huge on Tesla) plus allowable tax deductible mileage. You will have income on the personal side, but your business deduction far exceeds the income.

 

[M0unt41nm4n]

Ok... so my accountant got back to me. We will put it in my company's and my name using the "OR" and I can capture the full $7500 EV credit AND the Colorado $5000 EV credit, giving me a whopping $12,500 credit on the truck... no MSRP or income limits I am calling Tesla now to make the change. Since I have multiple vehicles they did not want me to section 179 Hummer tax, but to take the depreciation for 1 year. We check KBB on the CT value and if it depreciates more than the $20K (i.e. it's worth $80K in 1 year), there is no depreciation recapture. If it's more, then we wait another year. At the point where I want it fully in my name, we just do a distribution from the company to me (no tax) from past cash on hand and it goes fully in my name with zero tax consequence.

Always good to have a good accountant.

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