Ep. 92 | Untangling Business Vehicle Deductions (the facts)

WEBVTT

00:00:05.040 –> 00:00:13.195
Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime.

00:00:17.630 –> 00:00:35.585
Hey, everybody, and welcome back to teaching tax flow, the podcast. Onto episode 92 today, we are gonna dive directly into car and truck deductions. That’s right. We are gonna explain what they are and what they aren’t. But before that, let’s take a brief moment as always, and thank our episode sponsor.

00:00:38.190 –> 00:01:07.675
This podcast is brought to you by Strategic Associates. Are you a high income earner, real estate investor, or successful entrepreneur who is frustrated by having to pay $75,000 or more of annual tax liability? If so, Strategic Associates can help. Your first step to saving 1,000, if not 100 of 1,000, is to contact Roger Roundy atroger@strategicag.net or by calling 801-641-2956, and be sure to tell them TTF sent you.

00:01:10.040 –> 00:01:31.340
Alright, everybody. As you obviously read in the show description because we know you read all those descriptions word for word and understand them, and obviously, you see the title, we’re gonna talk about those car and truck deductions. So as again, you heard in the intro, we’re gonna talk a little bit about what they are and what they aren’t. So why I say that’s important. Right?

00:01:31.340 –> 00:01:55.365
I’m sure there’s a lot of people out there, and I can say this firsthand because I’ve heard it. And, you know, I was probably one of them at one time too, thinking you could just deduct everything that relates to your vehicle. So we’re talking mileage, fuel, oil change, car washes, window tint, window stickers, vanity license plates, everything. It’s not really the case. So we brought out a good guest today.

00:01:55.365 –> 00:02:17.305
More importantly, let’s recognize the fact that Chris Pacira was not here. So as everybody knows, I’ve known that guy for a long time. I can say whatever I want to about him on this one, and I don’t even have to edit it in or edit it out because he’s not here to defend himself. So, anyways, back to the topic. So Sean Flannery is actually joining us on this.

00:02:17.305 –> 00:02:30.245
I’ve known Sean for a while. Great guy. We’ve done a done a little bit of travel, bumping into each other, but more importantly, he is an expert in this area. So without further ado, Sean, how’s it going, man? How are you today?

00:02:31.585 –> 00:02:35.765
Good. Thanks. Thanks for having me. Good talking to you again, like always.

00:02:37.410 –> 00:02:43.010
So I guess we wanna talk about, vehicle depreciation or expense and all that. Is that

00:02:43.875 –> 00:03:01.055
Yeah. Let’s let’s look at this. Right? So, I mean, me being a gear head, I’m I’m thinking I’m like, man, how can you deduct, you know, putting a big block Chevy in a Miata or something? So we’re we’re we’re gonna leave all my random random ideas out of the mix, but I’d probably say that the best place to start with this.

00:03:01.055 –> 00:03:13.740
Right? So talk about who can actually deduct any vehicle expenses. So it’s not just anybody working a w two. Right? This is more your self employed business owners, etcetera.

00:03:13.800 –> 00:03:27.770
Right? So kind of walk us through who can take those deductions for 1, and then really just how a vehicle is even reported at all when it comes tax time. Right? So kinda walk us through what a vehicle means to a tax pro.

00:03:27.770 –> 00:03:30.650
Wow. So we we just really got it to the exciting here.

00:03:30.650 –> 00:03:32.010
Oh, yeah. We jumped right into it.

00:03:32.010 –> 00:03:32.170
Yeah.

00:03:32.170 –> 00:03:34.030
Yeah. I’m excited about this. Yeah.

00:03:34.605 –> 00:03:53.125
So if we’re talking vehicles now first off, you gotta be a business owner of some sort. Right? Unfortunately, congress has, removed anything that is for personal use of vehicles. There’s there’s one exception really out there. There might be one other that I’m not aware of, but it’s for the military.

00:03:53.125 –> 00:04:15.415
They do have some some exceptions. But if you’re not military, you probably cannot deduct your vehicle at all. Just south straight, though. If you do own a vehicle, now we’re talking maybe. And the the maybe kinda goes into how much you use it for your business and, what it’s what it’s used for.

00:04:16.050 –> 00:04:39.580
You’re when you’re looking at a vehicle, the the key threshold is 50% or more. If you’re using the vehicle for 50% or more, for business, then we can start talking about depreciating and taking actual costs. You’re talking about dropping an engine in there. It’s possible. You can write off a new engine on a a business vehicle.

00:04:40.635 –> 00:04:48.315
You can also write off I don’t know. I’m not such a gear at. Right? I just, you know, you wanna visualize my I’m a true accountant. Right?

00:04:48.315 –> 00:05:01.965
I’m sitting in my basement. You know, I haven’t seen the sun in days because that’s just what we do. So when I think of business vehicles, I think of, like, a car fresher. You know, those little, you know, like looks like a little green tree. Yeah.

00:05:01.965 –> 00:05:24.830
If it’s truly a business vehicle, a 100%, yeah, you can probably write that off too. So it’s pretty much it just kinda depends on whether you’re using the vehicle enough to justify actual, and that’s where depreciation comes into play and other expenses like dropping the new engine in or my car freshener. Or if we’re talking, hey, this vehicle is

00:05:24.830 –> 00:05:39.565
not used enough. So under 50% use and or just a cheap vehicle that you wanna use standard mileage. And with standard mileage, right, so now we’re at, what, 64, 67¢ per mile?

00:05:39.625 –> 00:05:47.500
Oh, it amped up. It inked up. We’re now at a grand total of 67¢ a mile in 2020.

00:05:47.640 –> 00:05:56.115
And it was just in the if I remember right, it was not too too long ago. Right? It was, like, 58 or something. So I feel like recently it kinda jumped.

00:05:56.175 –> 00:06:03.240
Like everything, prices have gone up. So Kager says slowly bumped up the, the cents per month.

00:06:03.240 –> 00:06:05.613
Hey. At least they did that. Right? And that Yeah. And then

00:06:05.640 –> 00:06:06.380
And Sean,

00:06:06.840 –> 00:06:29.105
this is actually so I’ve I’ve heard this multiple times in conversations with, you know, people that may have just been getting into business or, you know, not to not to go off the deep end on people that think deduction means free for something like, oh, you know, it’s a it’s a business expense. It’s free. Well, we know that’s not the case. But say say somebody’s going out. They’re like, alright.

00:06:29.105 –> 00:06:43.370
Listen. I need a vehicle. We’re gonna assume that we’ll just say it’s a 100% of your business. Say it’s a, I don’t know, a fleet vehicle or something. So there’s no there’s no chance that it would not qualify for for business use.

00:06:43.370 –> 00:07:00.150
So if they’re going out when, you know, we can get into lease lease and buy if we want to a little bit later on. But if somebody goes out and they purchased the vehicle, we’ll call it $110,000. They go out and they they buy it. Say they don’t even finance it. Say they paid cash for this thing.

00:07:00.530 –> 00:07:14.490
Great. It’s an expense. The vehicle’s registered with them. At that point, they’ve chosen to actually take the expense as the deduction. So taking mileage deductions beyond that, is that still the case?

00:07:14.490 –> 00:07:20.075
Can they still take mileage, or is it if and or how does that situation?

00:07:20.215 –> 00:07:44.895
Yeah. We we we you can’t do both. So this is kind of a one or the other. In any given year, you either take standard or mileage. Now it is possible to switch it where if in your 1st year, you use, I believe it’s, actual expensing, you can, the following year, switch over to standard mileage.

00:07:45.800 –> 00:08:12.415
But in my my time filing taxes for 10 plus years is either it’s a either it’s all in depreciation, actual cost is a better way to go, or mileage. I don’t know if they sell. Yeah. Like like, they don’t sell anymore, but if you go off and find yourself a Pinto or a Gremlin out there yeah, those vehicles are probably pretty cheap, under 20,000. Maybe not.

00:08:12.415 –> 00:08:20.230
Maybe they’re a collector. I don’t know. I don’t know. But under 20,000, you might be better off doing standard mileage regardless of use.

00:08:20.930 –> 00:08:21.730
But if you’re talking

00:08:21.730 –> 00:08:27.805
a 50, 60, and that’s actually a cheap vehicle now. Right? You’re trying to buy a truck. That’s gonna be easily a

00:08:27.805 –> 00:08:40.630
$100,000. There’s no way that standard mileage is a way to go just in running that thing every year. You’re gonna wanna do that. And then either, you know, either whichever route somebody goes. Right?

00:08:40.630 –> 00:08:53.390
Obviously, maintenance again, making the assumption that it’s strictly for business. All the maintenance costs, fuel costs, and really everything around it kinda roll in together. Right? Except

00:08:53.630 –> 00:09:08.280
Yeah. So the common thing is that you’d run across your your gas and oil, your maintenance. Hey, John and t, you were just talking about you you dropped me into. Maybe maybe you got that fleet vehicle. It’s a it’s not a $60,000 vehicle.

00:09:08.280 –> 00:09:36.155
It’s a $200,000 fleet vehicle. And that engine, yeah, it’s gonna cost you $60, but it’s cheaper than a brand new vehicle. So you can drop that engine in and start depreciating that, or if it’s a smaller price, expensive. Tires, registration, license, interest, if you got a loan, inch insurance, and, parking fees, tolls. If it if it goes into running the vehicle, keep it going.

00:09:36.155 –> 00:09:42.680
Hey. My car fresher. Right? Updated mats on the vehicle. Those are all expensive.

00:09:42.900 –> 00:09:54.070
Because we know you like, you know, because we’ll say cotton candy flavored car fresheners and, you know, pink and purple and glittery floor mats. So you have to have those in your in your vehicle.

00:09:54.070 –> 00:10:01.050
It’s weird to be. I got a I got a 5 year old daughter and pretty much everything I own at this point is got some pink and glitter on it all over.

00:10:01.350 –> 00:10:10.500
Yeah. Hey. I know how it is, man. In the most random places, sometimes sometimes, you know, you’re gonna take a pair of shorts or, you know, pants out of the dryer. You’re like, how that ain’t mine.

00:10:10.580 –> 00:10:13.460
How did that get in my pocket? Yeah. It’s like It just

00:10:13.460 –> 00:10:17.380
blew up in the dryer, and you have no idea where it came. Yeah.

00:10:17.380 –> 00:10:22.505
And then if you look at them and be like, come on. You’re 3 years old. You don’t know this? Of course, you don’t. You’re 3 years old.

00:10:23.765 –> 00:10:38.005
So here’s actually another question then too, maybe. As bad as it is, I should know the answer to this one, but I don’t. Right? So say you take mileage instead of standard on a vehicle. Can you still write off fuel costs though too?

00:10:38.005 –> 00:10:46.570
Or does that standard mileage kind of equate for fuel and not maintenance or repairs, but yeah.

00:10:47.110 –> 00:10:50.570
But that’s that’s actually a great question. I hear this constantly.

00:10:51.350 –> 00:10:57.465
But I’m glad it’s a good one and not a dumb one because I felt kinda dumb asking it. Oh. Oh, definitely not. Yeah.

00:10:57.465 –> 00:11:27.490
I see. Now so if you’re doing standard mileage inside of that for 2024, the 67¢ per mile is includes the cost of, your gas, your insurance, the the cost of the vehicle itself. They’ve kind of put it all in as into this one number. And the idea is if you drive a vehicle per mile, this is your cost of running it. Again, like I said before, a very cheap vehicle.

00:11:28.505 –> 00:11:50.915
Yeah, this this not only is probably more than your cost per mile, but or equal to, but probably more. A more expensive vehicle, your cost of driving it is probably more than that 67¢ a mile, which is gosh, man. I’m I’m a little old, man. I remember when gas is under a dollar gallon. Man, I

00:11:50.915 –> 00:12:04.985
I remember leasing a fully loaded Dodge Ram back in the day for it was $99 a month or was $2,450 prepay for 2 years lease. Now it’s like

00:12:05.385 –> 00:12:09.565
We we just gotta get banning my day. We bought a house for 5 grand.

00:12:10.265 –> 00:12:29.020
Right. But interest rates, you know, they were at 16 and a half percent. So, Sean, here’s so that thank you so much, by the way, for explaining that because I, again, I I hear that so often that it’s almost now I just kinda tune out. Right? Especially going to, you know, in the marketing world here.

00:12:29.100 –> 00:12:58.195
I remember going to tons of conferences and just hearing people’s way of describing this. It’s like, get out of here. So really, if you’re smart and and you I shouldn’t say don’t care what you people think you drive, but, you know, the whole beater with a heater mentality we used to say up here in Michigan. It’s like, go get the cheapest car possible that gets you from a to b hopefully or at least almost all the way to b, has a heater in it, and then take the mileage, and you’re actually making some. Like, you’re you’re way better off.

00:12:58.435 –> 00:12:59.655
You would actually get

00:13:00.115 –> 00:13:23.805
you know, you might not get more than what you can, put into it, but it’s real possible for you to get a much higher per, you know, percentage back. You know? If if you wanna round it out now, this isn’t all in 1 year because they limit how much depreciation is in any given year. Even if you use bonus 179, normal maker’s depreciation, little taxi on you there. I’m sorry.

00:13:24.990 –> 00:13:42.760
But you got a vehicle for a 100,000. Your your tax savings and thus money back in your pocket indirectly is gonna be depending on your income is usually gonna fall somewhere that 30% range. So even though you bought a vehicle for a 100,000, your out

00:13:42.760 –> 00:14:00.970
of pocket cost is still gonna be 70. Makes sense. And let’s actually talk about something too, and and I know we’ve discussed this very, very briefly at a few podcasts. Previous ones, there’s been some content we put out there around this. So let’s talk about the 6,000 pound

00:14:00.970 –> 00:14:01.470
rule.

00:14:01.985 –> 00:14:22.675
So this this is a fun one to me. Right? Because sometimes you look at you look at all these vehicles on the road, and you go like, listen, man. You do not need a Suburban, or you do not need a fully loaded full size diesel pickup truck for what you do. But there’s a lot of tax benefits to that.

00:14:22.675 –> 00:14:41.870
Right? Including, I think, the most interesting example of this. I I could not remember for the life of me if it was Land Rover or it might have been Mercedes with the G WAG. I don’t remember what which one it was, but they had advertised it was either a Business Insider, Forbes, or somewhere, but it was a full page ad. I do remember that.

00:14:42.030 –> 00:15:03.370
And it specifically talked about, the vehicle gross gross vehicle weight being over £6,000 and, you know, how this is perfect for business owners. So to me, I mean, this was years back. It it kinda blew my mind a little bit. Like, why in the world is is this here? And really didn’t talk a whole lot about price, which I think was pretty smart, you know, from those marketing and advertising folks.

00:15:03.830 –> 00:15:26.505
But let’s talk about that. Why in the world does a vehicle that weighs £6,000 or more, why is that different from driving around, you know, the, the explosive, Pintos back in the day. So I don’t even know how much those were. Those weighed, but they weren’t much. And if any I mean, every most people know what a pintos was.

00:15:26.770 –> 00:15:26.970
But

00:15:27.170 –> 00:15:52.895
Yeah. Yeah. They they might have been a lot because it was all steel back then. But, yeah, if if you’re talking a £6,000 vehicle or more, right, it’s it’s really 6000 to 14,000 that which is pretty much any vehicle outside of very large construction specific vehicles. Once you’re over that 6,000 gross vehicle weight rating, now that expands out how much depreciation you can take in the year.

00:15:53.055 –> 00:16:23.980
They really, really limit you to a a sub $6,000 vehicle is gonna be limited to, like, 12,400 in depreciation. That’s it. There’s nothing more. If, if you have your if if you have a vehicle more than £6,000, you can now take bonus once of add depreciation that can, eat up most of the vehicle’s costs. You’re still limited in total depreciation for any given year, but it’s much higher.

00:16:24.280 –> 00:16:32.485
And then so that’s 6,000. Right? So that’s back to the example. Right? Like, you look at some people and you’re like, why do you need that?

00:16:32.865 –> 00:16:48.185
But either they really like large vehicles, they might have a lot of employees, equipment they’re hauling around, or they are knowledgeable when it comes to this because there’s no limitation saying it has to be a certain type of business. Right? It’s just general and

00:16:48.425 –> 00:16:55.485
Yeah. Yeah. And you you pointed out a couple of big vehicles. Right? This isn’t the weight of the vehicle.

00:16:56.050 –> 00:17:23.870
It’s it’s a little bit different. So it’s a gross vehicle weight rating. So this is kind of a special, like, maximum rating that this vehicle could get in holding weight. And so you might be looking at a smaller vehicle like a Mercedes vehicle that it it’s actually luxury they call it luxury vehicle limitations. You you would think of Mercedes as a luxury vehicle.

00:17:23.870 –> 00:17:54.980
Right? A bunch of their vehicles, just barely, like, 6,100, 6,150 are right above that gross vehicle weight rating, even though you’re looking at it going, that’s a small relatively small vehicle, its actual weight is £4,000 or something because they gotta keep my the mileage per gallon low, but they they get that GVR up above the 6,000 so you can depreciate it. And, of course, then the marketers go to play, and they start bragging about it.

00:17:54.980 –> 00:18:01.685
Right. We we’re really good at twisting words. Right? It’s focusing on the benefits. Exactly.

00:18:01.685 –> 00:18:16.345
Of course. If if any marketers out there who twisted for the negative, they’re probably not in the you know, they might be in politics or to leave that alone. They but any anyhoo but yeah. I mean, I I found it very interesting. Right?

00:18:16.345 –> 00:18:30.890
So and really, Shout, like, why what might be the reason again that they they really did that? Like, is it more, like, they offer that £6,000? Is it to entice, you know Well one purchase or another? Or what’s the

00:18:31.050 –> 00:19:15.440
The answer is it It’s somewhere in a holistic cause for and there’s never holistic with congress. The a cause of allowing for real business vehicles to, get the full deduction, but also just congress being congress. And whatever side that you’re on, you can probably agree that it’s it doesn’t make a lot of sense. It is definitely a driver, though, of why vehicles are heavier because fleets, vehicles, if you go and get an f 150 and compare it to a vehicle, an f 150 in the nineties or the eighties, seventies, they were a lot smaller than they are today. And part of that is because of this, taxes.

00:19:15.660 –> 00:19:18.700
Makes sense. Makes sense. So there and anybody too, if

00:19:18.700 –> 00:19:44.855
you have any specific questions to, for our listeners on the 6,000 pound rule or any of this, as always, reach out to us. Obviously, there’s defeating taxes, the private Facebook group, ping in there. We got a lot of information. But, Sean, before I let you go here, so let’s talk about one more thing that I know I I know for a fact people have had this question because we’ve been asked this question. And it’s really buy versus lease too.

00:19:44.855 –> 00:20:11.050
So maybe, you know, what what would be the benefits with each? Obviously, I think everybody knows what a buy is and what a lease is. So I we don’t need to explain what that is necessarily, but maybe give us a couple examples where one may work better than the other. Maybe some things to watch out for where you could think you’re getting a better deal, but you’re losing on a huge tax benefit. Kinda walk us through your your perspective of that, you know, being a tax pro.

00:20:11.670 –> 00:20:32.215
Well, being a tax guy and, kind of concerned on spending cash, I tend to avoid leasing, but there are various reasons. Whether it’s cash flow, maybe you don’t necessarily know if you need this type of vehicle. You don’t wanna take ownership where lease does make sense. And, heck, sometimes you just get a great deal on leasing. It this happens.

00:20:33.555 –> 00:20:59.060
From a tax perspective, it does change your options. When with purchasing the vehicle, you you get the the depending on how much you use it for, the better of mileage or actual costs. And that includes all all of the costs of running it. But for lease, you’re you’re more limited to you don’t get that depreciation. Right?

00:20:59.060 –> 00:21:22.795
You don’t own that vehicle. So all you can write off is the monthly payment that you have plus the cost of operating. So if you have a a $500 a month lease, then you’re looking at a $6,000 a year lease cost plus your mileage, insurance, and all the other things. Or you can do that mileage. Same, same thing as a 67¢ per mile.

00:21:23.015 –> 00:21:24.695
It it really so it some of

00:21:24.695 –> 00:21:28.840
it may boil down to simply to somebody like getting a new vehicle every 2 years and not having

00:21:28.840 –> 00:21:34.965
to worry about, you know, for however long. Yeah. Yeah. Yeah. For sure.

00:21:34.965 –> 00:21:49.000
Like, I I drive mine till they’re they’re rust bucketed out. But some might like them. Yeah. Brand new shiny vehicle every year. So that’s that from that perspective, I try to like any vehicle, hey.

00:21:49.000 –> 00:22:05.630
They come to me, hey. Should I buy a vehicle? You know, from a tax perspective, it might make sense. You might get a benefit from them, but I’d never suggest buying a vehicle just for tax purposes. It’s gotta make sense for you economically and from a cash flow perspective.

00:22:06.570 –> 00:22:23.550
So if you’re looking to buy that $100,000 truck, but you don’t need a truck, and you don’t have the cash flow for the truck, the tax savings isn’t gonna outweigh the cost. And the car salesman out there hating us for saying this because they were open on their Christmas bonus.

00:22:24.145 –> 00:22:43.250
You know, they get everybody, you know, the the week before the end of the year that’s in there trying to buy vehicles. And I’m sure so oh, so here’s another dumb question I just thought about this too. So, for example, right, so a lot a lot of my friends are in the construction space. So they all went out and bought it. They buy new trucks all the time for some reason.

00:22:43.250 –> 00:22:50.135
Who knows? And and you’re right. Some of them are, you know, darn near a 150,000. So some of them went. They bought vehicles.

00:22:50.355 –> 00:23:06.395
So we’ll say during the cove during COVID time. Right? They’re buying these vehicles, but some of them waited almost a year and a half to get it. So I imagine it’s that point of registration that you could start any deductions on any of that. Right?

00:23:06.395 –> 00:23:13.000
It can’t be like, oh, I I put down a 50% cash deposit or I paid for an up I don’t know anybody pays for 1 up front if

00:23:13.000 –> 00:23:15.800
you were it. But would it have

00:23:15.800 –> 00:23:17.020
to be a point of delivery?

00:23:17.400 –> 00:23:46.800
Yeah. It it would be a boy like, point delivery or registration isn’t quite it. You could own a vehicle for 5 years and then place it in service and then start depreciating the vehicle. It’s really the point of when it’s actually available for business use. So whether you’re waiting a year and a half for that vehicle to show up so then you can use it for business, or you’ve been sitting in your personal use for years, and now all of a sudden you’re using it for business.

00:23:47.500 –> 00:23:56.495
Same thing. It’s the date that it becomes available for business use is the magic day and year thus that depreciation starts, and you

00:23:56.495 –> 00:24:04.170
can start taking those deductions. Makes sense. I’m scraping the barrel for the most random questions I can think of to ask you. So Well, I

00:24:04.490 –> 00:24:10.565
I tried. I tried. Maybe you didn’t realize it, thought of it. Like, that end of year purchase. Right?

00:24:10.625 –> 00:24:36.180
You’re going to buy a vehicle. It’s coming in at the 31st, last couple days of the year. That I mean, from a regular normal, like, 5 year depreciation, which is that maker’s kind of as slow as you can make it depreciation, that’s gonna be really low. Right? But the accelerated depreciation, like 179 or bonus, those still apply just as if you had bought it on January 1st.

00:24:37.220 –> 00:24:39.620
Makes sense. Makes sense. It’s all So

00:24:39.620 –> 00:24:52.460
you can get it. If you’re really trying to time things out, you might get a tax benefit and even a cash refund if you file your return early enough before your first payments are coming in for that brand new vehicle you got on December 31st.

00:24:52.520 –> 00:25:08.445
And not to even get into EVs because I know me and, me and Chris had a discussion on this couple months back. But I know, like, leasing, for example, with that just kinda recap what we spoke about a while ago. I know with EVs. Right? So say you lease an electric vehicle.

00:25:09.420 –> 00:25:39.555
You’re you’re really opting out of being able to take any of the personal credits, deductions, whatever they’re offering for EVs because the vehicle is really not yours. It’s the dealership. So the manufacturer, I believe, is the ones that’s taken those rebates if you were the federal tax credits or anything through that. But, obviously, if you purchase it, that’s a that’s a different deal. So I think they weigh that into the the least prices usually, and it’s outlined in all their marketing and advertising, but there’s always credits around it too.

00:25:39.555 –> 00:25:43.015
So I think there’s the, there’s a used vehicle one.

00:25:43.235 –> 00:25:58.295
Yeah. Yeah. So that that’s pretty much you you’re you’re pretty much nailed in it. If you’re leasing an electric vehicle, there’s that 7,000 up to $7,500 energy credit tax credit for an EV vehicle. He goes to the owner of the vehicle.

00:25:58.995 –> 00:26:19.155
So if you’re leasing the vehicle, then you’re leasing it from someone else. Could be the dealer. Could be, could be Tesla directly. Either way, whoever owns that vehicle that’s it’s being leased from gets that credit. I have seen quite often where that credit is then basically applied towards the cost of the lease.

00:26:20.160 –> 00:26:24.000
So you still get it indirectly, but you don’t get to put it on your tax return.

00:26:24.000 –> 00:26:40.960
If anything, I’m sure they kinda take it into account when they come up with the I, the depreciated value at the end of the lease because we all know yeah. Yeah. We’ll we’ll leave EVs out out of it a little bit. That’s a it’s a whole another discussion. I think either side of the fence, somebody especially being in Detroit.

00:26:40.960 –> 00:26:49.235
Right. So up here, people either love them or you hate them. There’s very few people that are kind of in the middle. We don’t wanna we don’t wanna piss off 50% of our audience.

00:26:49.855 –> 00:27:05.895
Yeah. Yeah. The the only thing I would wanna add on the EVs just to watch out, there’s a sometimes overlooked, unique thing about the EVs and that tax credit. If you were to buy a EV, and we’ll we’ll use that. What were you saying?

00:27:05.895 –> 00:27:37.160
A $60,000 truck. If you were if you were to buy an EV for $60,000 and then get that $7,500 credit, you can depreciate the full 60,000. You have to take the cost of your vehicle, 60,000 less the credit of 7,500 if that’s what you get. Mhmm. So then your depreciation that you can take is 52,500 over the the the life of that vehicle’s depreciation.

00:27:37.460 –> 00:27:51.550
That’s a great point. Great point. That that that was tricky. Even, when I’m working with my team who works just taxes year round, they’ll miss that. It’s an easily overlooked difference for EVs.

00:27:51.610 –> 00:28:06.390
I’m sure it’s buried somewhere in the IRS publication that is about a mile sick, and, you know, you’d have to kill a 1500 trees just to print that thing. So yeah. I mean, of course, you guys know every single page of that. The right? Of course.

00:28:06.390 –> 00:28:07.930
How dare you miss anything?

00:28:08.790 –> 00:28:10.950
It’s why we’re reading material every night to go

00:28:10.950 –> 00:28:21.170
to bed. Yeah. Makes sense. Makes sense. But speaking of going to bed of and and the pink and purple floor mats, of course,

00:28:21.170 –> 00:28:21.990
like a pillow.

00:28:22.290 –> 00:28:54.020
But, yeah, speaking of going to bed, hopefully, this topic didn’t put anybody to sleep. Actually, I’m I’m sure it didn’t because if it did, you probably just turn it off. But I’m glad we touched on this again, kind of as I alluded to at the beginning. There’s a lot of confusion around this, and I wouldn’t I wouldn’t necessarily put it in the bucket of ignorance in a bad sense. It’s just I think it’s sometimes when people think of, right, going into business for themselves, you know, the whole, entrepreneurship is all glitz and glamour, pink and purple floor mats and, you know, glitter.

00:28:55.440 –> 00:29:20.365
It’s not. So not everything is free. There are some complications when it comes to deductions and and write offs and all this stuff and what expenses qualify for what. And this I this I would say is probably, in my opinion, from what I see again, one of the most probably misused, unintentionally misunderstood ones from the taxpayer side. So thanks for diving into it, Sean.

00:29:20.365 –> 00:29:28.690
I know I know I appreciate it, and hopefully our listeners do too. So we’ll have to have you back on here. Maybe we’ll do a car and truck 2.0 eventually.

00:29:29.525 –> 00:29:44.970
Yeah. I’m sure there’ll be some follow ups. Yeah. They they did make, like all tax laws, they tried to make this clear to the mud. And and this one just has its own unique things, and it’s not a common question or concern, within the clients I’ve worked with over the years.

00:29:45.670 –> 00:29:55.825
And, of course, when someone finds out that I do taxes for a living hey. Dinner. Well, I got a tax question about my vehicle. Yep. Of course.

00:29:56.045 –> 00:30:05.265
Always. Always. But awesome, buddy. Well, I well, I appreciate you joining us back up here again on the podcast. I know you listen to it, which is always great.

00:30:05.345 –> 00:30:16.780
And I should have quizzed you on previous episodes to see which ones you actually did listen to. But, you know, I won’t, I won’t harass you too. Thank goodness. I can’t even remember all the ones we’ve been. So Yeah.

00:30:16.780 –> 00:30:17.100
The memory

00:30:17.740 –> 00:30:19.580
yeah. I have the memory of the field mouse, man.

00:30:19.580 –> 00:30:21.280
I don’t remember what happened yesterday.

00:30:21.815 –> 00:30:28.075
But you know the tax pump. That’s the important part. We don’t care about what you did yesterday. Yeah. Nobody else cares about you.

00:30:30.510 –> 00:30:45.615
Alright. So well, thank you so much, my man. We appreciate it as always. And, again, as I mentioned a little bit earlier on too, any questions on this topic, please, please, please feel free to reach out to us here at teaching tax flow. You should just email at hello at teaching tax flow dot com.

00:30:45.940 –> 00:31:04.210
Go on our Facebook page at defeating taxes is that private Facebook group, growing like wildfire. And literally, we make it as easy as possible unlike congress and the IRS do for taxpayers. Go to defeating taxes.com. It sends it straight to that Facebook page. So I don’t have to give you the long URL.

00:31:04.210 –> 00:31:18.525
Tell you to click here, click there, spin around twice tapping your forehead, and then you’re in. It’s that easy. There’s no excuse. That’s your private end. As always, we will see everybody back here on the podcast next week, different topic, roughly the same time.

00:31:19.145 –> 00:31:20.045
See you soon.

00:31:24.600 –> 00:31:42.180
The content provided is for educational purposes only. We encourage you to seek personalized investment advice from your financial professional. For all tax and legal advice, please consult your CPA or attorney. Investment advisory services are offered through cabin advisors, a registered investment adviser. Securities are offered through Cabin Securities, a registered broker dealer.

00:31:43.440 –> 00:31:53.545
The content of this podcast does not constitute an offer of securities. Offerings can only be made through an offering memorandum, and you should carefully examine the risk factors and other information contained in the memorandum.