If you bought a car in 2017 that cost over $15,800, Uncle Sam considered it to be a luxury car and put a lid on your depreciation. For example, if you bought a $40,000 vehicle and drove it 100% for business, your maximum depreciation deductions for the first five years would total just $15,060. And to fully depreciate the car would take nineteen years. Ridiculous! Well, … [Read more...]
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Tax Reform Eliminates Tax Benefits of Business Vehicle Trade-Ins
Remember the good old days (a few weeks ago in 2017)? That was when you could use tax code Section 1031 to avoid paying taxes when you traded in a business vehicle for a replacement vehicle. (In 2017 it was the same story for an exchange of other personal property like equipment, collectibles and more.) Well, tax reform is here and it has killed the Section 1031 … [Read more...]
Avoid business-mileage “metropolitan area” hassles (Part 2)
In a recent issue of the Tax Reduction Letter, we explained how to keep IRS “temporary work location” rules from destroying your business mileage deductions. In this new issue of the Tax Reduction Letter we’ll demystify the IRS’s complicated “metropolitan area” rules that also impact your business mileage deductions. Leave it to the IRS and the courts to make business … [Read more...]
How to maximize vehicle-mileage deductions (Part 1)
Whether you’re running a corporation, proprietorship, or partnership, you want to claim the maximum mileage deductions possible. But be careful. You see, it’s extremely important to deduct only legitimate miles. If the IRS finds mileage-deduction violations, you’ll look like a tax cheat and potentially open the door to a detailed audit. No fun. So how do you deduct all … [Read more...]
How a little knowledge can save you in an audit
Most tax advisors serve their clients well. But that doesn’t mean that you should be ignorant of the tax law and passively accept all your tax professional’s advice uncritically. Hey. It’s your money and you need to be aware of what’s going on… especially if you’re called into an IRS audit. That’s what Mrs. and Mr. Smith found out the hard way. Read the full article. You … [Read more...]