Probably only for advertising or business promotion. Have you asked your accountant?

 

That's how I was able to race cars for 15 years. My company logo was on the sides

I also remember a time you could deduct a company car but then the IRS put a $ limit on them

Today I really have no idea, tax laws change.

 

I think those are great ideas, but I was always concerned about raising a flag at all for the tax man. Yes, with your charity scenario, all points are likely covered, but it would still be a red flag, and you might get audited because of it. Even if everything is found to be OK (which they always find SOMETHING) an audit is still an expensive endeavor.

 

That is the problem. I want to figure out a way that will be bullet proof and not trigger an audit. I agree that they will always find something. I passed an audit many years ago to later have $583 charged to me after review. (I guess they had to cover the auditors costs) . The only way I see that does not trigger red flags is a rental business. You would have to actually rent the cars out and generate rental revenue and liability. Another idea I had was to start a movie prop company and loan the cars out to studios for a small fee. Every time the car got in a movie, it would increase in value. They would take really good care of it and be responsible for any damage. Another tax shelter I have seen is car museums. Most lose money but serve as a writeoff for owners. you would need a decent size collection or several collections combined to make it viable. I also thought of shared ownership. You buy a car then sell 10% or 20% ownership interests in it . You own 51% and thus control the asset. They are owners and would thus take good care of it. They could even make monthly payments to you for their share . Say 5 owners at 500 per month each. They all get the car 3 days a month. Their payment would more than cover all expenses and the car would be a business asset. Lamboshare.com for example. You could then fully depreciate the car and have an option clause to buy out the other owners for their original investment less interest expense. Someone could drive the car for a year and get back all their money. Who would not want to do that. You could own a fleet of all your favorite cars , write them off and make income. Be creative guys and girls there must be a way.

 

I’ve been trying figure out a way for years, found nothing that is bulletproof.

 

I am in for answers!

The following is some FWIW:

First, there would be no write off for personal taxes (other than DMV fees etc in some states under Schedule A), only business taxes.

This all personal opinion posted here as a reference for future search use.

I don't think a 100% write off of purchase price is possible during the year of purchase.

For purchase asset classification, it is a regular motor vehicle so the asset depreciation limits come into play. Clearly it is not an SUV with weight over 6000 lbs that has more attractive depreciation schedule.

For asset depreciation write off, I believe one gets $10K the first year and $5K each following year until basis goes to zero. With a $200K car this will more than likely take longer than your ownership period. Plus be ready to report and pay gain tax (or report a loss) upon sale of car.

You will also need to keep a detailed contemptuous mileage log and the business use must be over 50%, else you will have recovery and other complicated tax return calculations. Commute mileage does not count. Many do not keep this log correctly with contemporaneous the key word and if not contemporaneous IRS may (probably will) disallow any deduction.

Now, if the vehicle is a true business use vehicle you can get some deductions such as fuel, parking, insurance, maintenance. That’s the good news IMO.

Any financing interest could also be written, again noting the business to business use contemporaneous logs and the interest could be substantial.

To be clear your tax benefit is in relationship to business (excluding commute mileage) vs personal use mileage (including commute mileage).

Modifications may be more difficult to write off as these (in theory) increase the value of the vehicle or extend it life. These modifications would be added to basis and also depreciated at the IRS limits. Whether (technical code) section 179 can be applied to these modifications and the modifications treated as separate assets and not additions to an already established asset is case by case.

I would expect an accountant to spend 2 hours doing an analysis for the OP if the OP supplied all the anticipated costs, documents, etc. But, note there are many tax law changes for year 2018 and some regulations are not finalized so opinion may differ from reality once the final forms and regs are issued.

I really think the bottom line is:

A - If the vehicle is a true business use regular vehicle it can be deducted, yet expect the same tax benefits/ deductions as if the car was a Toyota. A Lambo can not be written off at amounts the OP may be expecting.

B - Any other write off way is high risk and a professional tax preparer may not wish to accept that risk.

Outside the box thinking, if the car is bought as an investment, art, R&D mockup model, as racing put driven on the raod, promotional sign or other asset class, I'd think this is a grey area as again it is a motor vehicle. I could see accountant not wishing to classify as non-vehicle and accept the risk. To stand up to the IRS audit under this grey area, IMO mileage would have to be very low or zero and may also require a non-op road operation certificate from the DMV. Again I think this paragraph is a grey area and defeats the OP desire of driving the car and getting major tax benefits.

In closing, again I write this for future search reference and FWIW as a contribution to our great forum.

I am ready for my bashing/ heckling - LOL

Have fun.

 

I appreciate all of Kennys input and am also aware of all the conventional rules. I am a business owner (as are many Lambo owners )and thus looking at all possible unconventional ways to do this. I think I may have a way. If you are self employed with substantial income you can contribute approx. 53K per year to a SEP IRA . If you set up a self directed IRA you can contribute the full 53k for 2 years or 3 until the Self directed Ira has the funds to buy a classic lambo as an investment. You will get the writeoff when contributing to the SEP . The corporation that is the self directed IRA is also owned by you. It will own the Lambo but you will own it. I currently have a self directed IRA but need to study the rules to see what the limitations are. As far as I know, you can invest in almost anything as long as it stays within the rules. Someone could save 53K per year for several years, get the write off and use the money to buy a Lambo. The only downside is that you can put the 53K into any investment and get the tax writeoff. Why not take the money you are saving for the lambo and put it into the SEP. (You must be self employed to do this or are limited to conventional IRA limits. Maybe someone knows the specific rules on self directed. I have the book somewhere but will have to search for it. Lee

 

After all is said and done you have to consider the possibility that any attempt to use your Lamborghini for a tax write-off could trigger an audit. Is it really worth it?

 

Yes it would. Being an accountant been doing taxes for years. Two tips I tell my clients with expensive toys: 1. Create an LLC or multiple (if you don't want put all in one basket-lot of work during tax time, but highly recommended. Also comes with a lot of other benefits but I'm not going into it LOL) and put them under it. 2. Dedicate a credit card for each LLC (this way you can keep the expenses separate from person and easy tracking when tax time).

2018 tax deduction for "business vehicle use only" write of is up to 1,000,000 per item and cap at 2,500,000 total per Section 179 Tax Deduction. I'm not going to explain it in detail but feel free to real about it here. Section 179

That said, another big tip is. Don't own the LLC "toys" more than 3 years and showing loss for those 3. 85% of the time it attracts the IRS. So if you're planing to keep your toy for a long time and stay low key, show profit 3 out of 5 years. That's usually a very very good rule of thumb.

The ULTIMATE and FINAL tip. KEEP ALL YOUR RECORDS! hint* number 2 above credit card.

Nothing in life is 100% as we all know. But heck, all my clients never got audit and I have been doing this for years. knock on carbon fiber.

Happy Friday!

 

Thanks for the great input. I use the 179 every year for equipment purchases to write off big $$$$. Is not the limit 2.5 million total per LLC and limited to net profit? Also my understanding was that the 1 million was an annual limit but could be a combination of purchases. I am using it for multiple large equip purchases with the 1.000.000 as the annual cap. Also since you are an accountant, what is the rule on self directed Ira buying cars? So to crystalize an Idea, I form an LLC that is for say racing, lambo parts,advertising, movie props etc. My Development LLC pays the other for advertising so it makes enough profit to section 179 a lambo. (I of course bring in other revenue through other customers) I let the (advertising) company turn a small profit enough to justify the write off plus a little. I get the lambo and the write off fully legitimate. Am I on the right track? Lee

 

Section 179 does come with limits – there are caps to the total amount written off ($1,000,000 for 2018), and limits to the total amount of the equipment purchased ($2,500,000 in 2018). The deduction begins to phase out on a dollar-for-dollar basis after $2,500,000 is spent by a given business (thus, the entire deduction goes away once $3,500,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.

First off, I would never advise using IRA to open a business let alone buying a cars. Highly not recommend because it involves a lot of grey areas that you most likely don't want to get yourself into. But if you think you're up for it. Read this thoroughly before moving forward. Publication 590

You are correct. make sure to purchase the lambo under the business name not your personal name, just as your development LLC bought equipment in the past.

 

LeeT or others, I’m not an accountant but I thought if you get any current use, personal use, out of investments in your IRA it would invalidate your IRA and possibly cause it to become disallowed. This is my understanding for real estate too such that if I were to stay a single night in a rental home I bought within my IRA, I could face the entire IRA to be taxed.

I believe if you have any debt on the “investment” and there is income associated with the debt financing that would trigger UBIT, too?

Bottom line: pay your accountant to opine first!

 

Thanks for all the input. I was concerned that I would violate the no personal use concept behind the self directed IRA. I only use mine for monetary investments right now. I think the end result is that you can probably write one off if properly set up by using 179 creating a legit business purpose and keeping meticulous records. The only problem is that you better be ready for audit every year . Passing it with all the cost and paperwork would probably offset any gain. Lee

 

Unlikely any bureaucrat, judge or jury would ever side with the Lamborghini owner as to its use being a business purpose if there was any shade of gray in it. IMO. Same with “those rich guys with IRAs” buying a vacation home with it.

 

I am still in for answers.

I think vehicles are what the IRS terms listed property and therefore 179 deduction for them are limited.
Maybe USA 2018 tax law changed?
In other words, 100% write off in year of purchase is not possible.
Plus you need to track the mileage and keep business use over 50%, which may or may not be difficult, to avoid depreciation recapture.

The grey area I seem to see in the above posts is the Lambo is being claimed as equipment. As equipment you get 100% 179 deduction up to the overall limits discussed.

Maybe a major first step for the OP's goal, classify on a tax return as an automobile or not? I think that is a grey area and has risk.

Maybe I am beating a dead horse, yet IMO any write off will have to be under business tax returns. 100% write off seems unlikely. As a business asset one can get the usually deductions, same as a Toyota at greater amounts, and a gain loss upon sale.

Again still in for answers.

 

The thing that really chaps me is that I can buy a million dollar plane or helicopter and write that off. I guess the tax laws were written with specific people and groups to be taken care of. I think it is the image of a Lambo that causes more problems than the asset itself. What corp exec actually NEEDS a 40 million dollar jet? In the corp world it is more of mine is bigger than yours( but they just reapproved the writeoff) I wonder how many congressmen bought heavy equip stock before the 179 deduction was passed.

 

I am an accountant and tax preparer. Question for you: What are the heaviest accessories that you can buy for a 2021 Lambo Urus? Also, can those same accessories be added and paid for at the initial purchase of the vehicle so your total purchase price contract reflects that the vehicle had the accessories when delivered?

 

Are you trying to increase the GVWR?

 

Yes!

 

Does adding accessories actually change the GVWR or just add curb weight? I would bet The Irs uses the actual GVWR from the manufacturer. However, I bought a Ford f750 dump truck that had the gvwr lowered to 25K from 36K to avoid the 25K CDL license limit. I dont know if it was done by the dealer or Dump bed Mfgr.