Tax preparer says I can write off $90/night motel per diem!?

[lowrange]

FIRE THIS TAX PREPARER. You can only depreciate a vehicle for what you paid for it. You can not write off "vehicle usage" on a CMV. If you do so, then you cannot claim other expenses for that vehicle (like fuel, repairs, etc.). That would be double dipping, and would get you in a boatload of trouble. A truck gets depreciated, plain and simple.

This person sounds like she has no clue as to how a trucking business works.

She doesn't, that's why I like her.

[lowrange]

Of course, but for those years that you are depreciating, you have the ability to pay minimal taxes. Once that depreciation is complete, however, the gravy train has left the building.

Rev; sees no other alternative than to buy a brand new truck every 3 years, and throw the old one away. :wink:

:idea:



:shock:

[Rev.Vassago]

Of course, but for those years that you are depreciating, you have the ability to pay minimal taxes. Once that depreciation is complete, however, the gravy train has left the building.

Rev; sees no other alternative than to buy a brand new truck every 3 years, and throw the old one away. :wink:

:idea:



:shock:

Better yet, I'll form an S-corp, sell the truck to myself for $1, then give it to a charitable organization every 3 years. Then I can double dip on the writeoff!

[lowrange]

Better yet, I'll form an S-corp, sell the truck to myself for $1, then give it to a charitable organization every 3 years. Then I can double dip on the writeoff!

Seems like it would be easier to sell it to someone for $5k who would be so grateful he'd sell YOU his late model car for the same...

oooo

[Rev.Vassago]

Better yet, I'll form an S-corp, sell the truck to myself for $1, then give it to a charitable organization every 3 years. Then I can double dip on the writeoff!

Seems like it would be easier to sell it to someone for $5k who would be so grateful he'd sell YOU his late model car for the same...

oooo

Yeah, but then I can only write off the $5K. Depreciating $5000 over 3 years seems pointless. I want to depreciate $100,000 or more over 3 years.

[lowrange]

Better yet, I'll form an S-corp, sell the truck to myself for $1, then give it to a charitable organization every 3 years. Then I can double dip on the writeoff!

Seems like it would be easier to sell it to someone for $5k who would be so grateful he'd sell YOU his late model car for the same...

oooo

Yeah, but then I can only write off the $5K. Depreciating $5000 over 3 years seems pointless. I want to depreciate $100,000 or more over 3 years.

I'm saying, after three years, you sell the $100,000 truck for
$5000. Capital gain of $5000 on a fully depreciated truck. There's going to be some capital gain, right? Even the scrap yard would give you something. Beauty is in the eye of the beholder and some guy would be so happy to buy it for $5000 he'd sell you, I don't know, a cottage on a lake for a bargain price!

[Rev.Vassago]

I gotcha. That would work too, except that property values suck right now. I'd want at least a penthouse apartment in NYC in trade for my truck. 8)

[lowrange]

One last one, Rev? I don't want to give this chick too long of a leash.

She says I can only write off half of that $52/day per diem. I thought it was more than that (2007). Which is it?

[Rev.Vassago]

One last one, Rev? I don't want to give this chick too long of a leash.

She says I can only write off half of that $52/day per diem. I thought it was more than that (2007). Which is it?

50% is what someone who is not subject to the HOS rules can write off. Last year, I think it was 75%, but don't quote me on that. It's in the IRS literature specifically as "individuals subject to Hours of Service".

[no_worries]

Of course, but for those years that you are depreciating, you have the ability to pay minimal taxes. Once that depreciation is complete, however, the gravy train has left the building.

Technically, depreciation should coincide with the usable life of the equipment, establishing a residual value at the end of the term. Most don't do this and simply depreciate it out because they'd rather have the immediate tax benefit now. They don't realize that when they go to sell, they give back much of that benefit.

[Rev.Vassago]

Technically, depreciation should coincide with the usable life of the equipment, establishing a residual value at the end of the term. Most don't do this and simply depreciate it out because they'd rather have the immediate tax benefit now. They don't realize that when they go to sell, they give back much of that benefit.

I've talked to several accountants, both trucking and non-trucking, and all seem to agree that to do it properly, a Class 8 vehicle must be depreciated on a 3 year cycle.

Personally, I'd rather pay the tax when I sell than pay the tax now. I don't like giving free loans to the IRS.

[lowrange]

One last one, Rev? I don't want to give this chick too long of a leash.

She says I can only write off half of that $52/day per diem. I thought it was more than that (2007). Which is it?

50% is what someone who is not subject to the HOS rules can write off. Last year, I think it was 75%, but don't quote me on that. It's in the IRS literature specifically as "individuals subject to Hours of Service".

You're right and now I'm getting nervous.

Really though, I think I've already lost opportunities to lower my taxes. I think we've already discussed most of the variables here, I don't think there is anything left.

[Rev.Vassago]

That's the problem with a crappy accountant or tax preparer. Even if they screw up, it's still your fault.

[no_worries]

I've talked to several accountants, both trucking and non-trucking, and all seem to agree that to do it properly, a Class 8 vehicle must be depreciated on a 3 year cycle.

Right, but nowhere are there instructions to depreciate 100%. The business is supposed to figure out what the residual value at the end of the term will be (what will it be worth) and the difference between that and the initial sales price is how much should be depreciated. Most simply depreciate 100% and then are stuck paying the capital gains when the sell. Actually, what often happens is, when faced with the tax bite, they trade in the vehicle on a new one. They don't have the tax bite from capital gains, but their acquisition cost, and therefore their depreciation, on the new truck is lowered. My only point is that, in the end, the IRS usually gets roughly the same amount.

[BanditsCousin]

Even the per diem has 2 different rates. There's a high and low. Find an accountant that knows this as well.

[lowrange]

Even the per diem has 2 different rates. There's a high and low. Find an accountant that knows this as well.

I got them back. The final bill wasn't so bad ($3700) and everything looks about right. I'll need to go through them more thoroughly though, and I'll be sure to check on the rate she used.

I do know this, I paid in $7000 in estimated taxes and she only wrote down $6800. When I told her about it, she said 'that's what you told me.' I don't know what I told her, but I was reading it off to her and I know it was wrong as soon as I saw it. She wasn't about to change it, though.

Either way, it's wrapped up. The IRS may refund the difference anyway. Otherwise, maybe I'll have to file an amended return later. My immediate goal is to find a new job.