Quackledork

It doesn't explicitly. You can write off legitimate business expenses. It is not unusual for a company to supply executives with a car for their use as part of their compensation package.

The company will lease you a car to use, you have to care for it, fuel it, and insure it, but the company agrees to pay for the lease. The lease is an expense, which comes right off the company's total income. As long as you are not egregious and lease like 9 cars, for one person, it is fine. That is not to say there is not some risk. But, I know a lot of business owners who do this and have never had an issue.

ygmn

LOBBYISTS had congress written into tax law for businesses and small business and rich peeps benefit....

Heck you can write off a Yacht if you hold meetings on it...

this is why expensive high end cars are leased for most part...

Only thing is if your plumber showed up in a GLE 63 well you might not like that so much versus the one who shows up in a 1976 ford F100.

places

Please know the value of the lease (or purchase) needs to correlate with the business income. A business generating 50K per year in income would raise serious flags if the owner went out and wrote down a 125K AMG.

Furthermore to set the record straight, the only way to write off a 125K car purchase would be through scheduled depreciation, which would mean you would need to keep the car for probably five(?) or more years otherwise there would be tax implications at sale. A 6000 pound SUV however would allow for accelerated depreciation but one would still need to keep the SUV for 5 or more years (not sure on time might be 7). I would suspect if a business is taking on a 125K car for lease there is income to support it. As for writing off the lease, the business is not writing off the full 125K, just the amount of the lease. All this is predicated on the vehicle being 100% business use.

Take away this tax benefit and watch car sales take a hit. It's a big part of the luxury market.

Yogibara

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means if you finance a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. This deduction is good on new and used equipment, as well as off-the-shelf software. To take the deduction for tax year 2020, the equipment must be financed or purchased and put into service between January 1, 2020 and the end of the day on December 31, 2020. This deduction is not automatic and must be elected.

hyperion667

^But for those of us that don't itemize....

HBerman

You are limited to $11,600 / year for vehicles under 6000 lbs. Check the rules on 179 property. Also, the vehicle needs to be used more than 50% business. There's no free lunch here.

places

This is correct. Must be over 6000 lbs. to accelerate the depreciation and must be business use.

Rob Kaloustian

Paid cash, do that all the time so I can jump in or out of things when I want. I, also, hate payments of any kind.

CALBenzo

Owned and paid cash. I tend to keep my cars a while since I spread my driving out with other cars, and I only have 7K on this one after 2 years. I have been eyeing the S63 Coupe before they stop making them, though! )

C280 Sport

It all depends on what the business is and what the vehicle is used for in relation to the business. Is it legal yes if it applies to this persons LLC. You also can write off everything for that car (portion) of it. Gas, upkeep, interest on loan. While I do not write off any of my MB’s I do write off my work van( Dodge). Again it is used for my business.

C280 Sport

If you do not itemize and take a standard deduction instead then this does not apply to your situation.

C280 Sport

It is not so much the $120,000 V8 Sports sedan. It is the fact that the vehicle no matter what it is. Is used for the business. I have a dodge caravan I use but for what I do I need that. If I needed another type of car then I could of written off say my GLK or ML or even bought a AMG. Make, Model engine make 0 difference. Depends of the business really.

ygmn

Someone said long time ago..

No reason to spend a fortune to save a dime...

Just because a business can write off some money for owning or leasing a car does not mean it makes the best business sense...