What Happens When You Combine Auto Journalists With Internet Forums?

"For Sweden" (rallybeetle)
07/13/2016 at 01:31 • Filed to: Oppo After Dark, Oppo Late Night, Matt Farrah, The Smoking Tire

Heated salty discussions about Doug DeMuro-style tax planning! !!!error: Indecipherable SUB-paragraph formatting!!!

DISCUSSION (12)

TheHondaBro > For Sweden
07/13/2016 at 01:54

Dr. Zoidberg - RIP Oppo > For Sweden
07/13/2016 at 01:56

Those chairs look really nice though

McMike > For Sweden
07/13/2016 at 05:26

I wish I was smart enough to be able to follow the Reddit format. It reaks of first-gen Kinja.

The Dummy Gummy > For Sweden
07/13/2016 at 08:04

The poster critisizing him isn’t wrong. Why would you lease for $27,000 when you can own it for a little bit longer payment schedule. That lease assumes an almost 68% depreciation rate, which that car will not have.

I mean...how people spend their money isn’t anyone else’s business...but he really is just calling a spade a spade.

Nimbus The Legend - Riding on air like a cloud > The Dummy Gummy
07/13/2016 at 18:41

yea... federal tax wise may be the same across the board. But state taxes are something everyone forgets... LOL

Nimbus The Legend - Riding on air like a cloud > Dr. Zoidberg - RIP Oppo
07/13/2016 at 18:44

they get to sit down!?

The Dummy Gummy > Nimbus The Legend - Riding on air like a cloud
07/14/2016 at 08:32

Not even. The write-off would be $9,000 a year. I’m assuming he’s adjusting out of the $77k range and not the $205k because if that was the case he is even dumber than I thought. Let’s even give him the maximum adjustment and it’d save him around $580 a year that still takes the depreciation to mid 60 range. Now if you compare that to the write off you’d get for owning the car, it makes it even worse a deal. This is simply a bad deal and his accountant is bad at his job.

Nimbus The Legend - Riding on air like a cloud > The Dummy Gummy
07/14/2016 at 15:10

I cant make that same claim yet, it just feels like there is a lot of information missing.

The Dummy Gummy > Nimbus The Legend - Riding on air like a cloud
07/14/2016 at 15:14

Knowing how taxes work, I can. It is a poor financial move, But as they say, fools and their money.

Nimbus The Legend - Riding on air like a cloud > The Dummy Gummy
07/14/2016 at 16:15

yea, i only worked for a cpa for a few years so im not quite so knowledgeable , but it seems to me, like I said before, there is too much info missing that has to be assumed to make a reasonable judgement...

I think the thing most people (redditors) are calculating, is leasing vs buying outright cash, with no monthly payments and that would make the most sense if we were normal people and not people that drive multiple cars for others’ viewing please, for a living. I think Matt’s thinking was more so, lease payments vs loan payments.

If you are using depreciation schedule, can you still “write off” 100% of your loan payments? Just the principle?

Also

I could easily imagine that the interest of the loan after 4 years to be way more than the interest of the lease, based upon the “agreed upon value” of the car.

I would also imagine that during the term of the lease, maintenance would either be paid for or part of the package. Some car makers used to include maintenance for the term of the loan, but only a few, and i dont think they can do it anymore. Whereas if he is leasing the car, with maintenance taken care of by the dealer, he doesnt even have to worry about those costs, or keeping track of what percentage of time he used the car for business or personal use....

I think a really tricky part too is, he is technically an “automotive journalist”. So almost every time he gets in a car, he technically could be working. So technically, he could be using the car for work purposes 100% of the time. Which would probably set off red flags with the IRS every year and result in a lengthy audit. We had a similar issue with a general contractor before.

Also The IRS only allows a 2% deduction for tax preparation fees, so (and i know its a reach) maybe he is saving money on that end by not having to buy the car, have a depreciation schedule, calculate, track and update his accountant on the business uses and expenses (read: his accountant charges a lot), vs just leasing, having the maintenance taken care of, and the added bonus of being able to return the car later and hopefully having some lease equity that he can put towards leasing another car that he can use for review, video or just generally use for work?

The Dummy Gummy > Nimbus The Legend - Riding on air like a cloud
07/14/2016 at 16:40

I’ve never known Ford to cover maintenance. He said this car was strictly used for business so keeping track wouldn’t be an issue.

If he is getting maintenance covered on the lease end (unlikely) then that is a better deal, but from a straight comparison of buying/leasing, for someone who “needs write-offs” (one must assume he’s making so much money he needs to bring down his AGI, purchasing would be the more fiscal route.

I’m just going off experience working as a CPA, but hey I could be wrong my license is NJ.

Nimbus The Legend - Riding on air like a cloud > The Dummy Gummy
07/14/2016 at 17:14

What most companies are doing now is offering a “maintenance package” which ranges in price but is usually only a $1000 to a couple thousand depending on the car. Also, a lot of lease terms are the same length or even shorter than most warranties. This comes in handy when the dealer charges $1200 for a brake job. And considering he will probably beat on the car for our sakes. It makes the lease more appealing.

Another thing is he only had to pay the tax on his monthly lease payments, vs having to pay the full sales tax for the total amount of the car, had he bought it.

Kiplinger.com used a Nissan Altima as an example: If you secured a low interest rate (2.9%) on a three-year lease, you would end up paying taxes on just $8,264 instead of the sales price of $21,403.

Damn... if his CPA went through all that factoring and calculating, then hes good! But if he just said to lease because hes lazy, then he is really BAD!!! LOL

I think about crap like this all the time before i make big decisions, so for me its standard operating procedure, but i know a lot of people dont really think about it much deeper than their down and monthly payments....