Corporate Leasing [Archive] - Bimmerfest - BMW Forums

: Corporate Leasing

12-27-2001, 07:50 PM
I realise this is probably a question better directed at my accountant and such, but I'm going to ask here anyway.

I have some questions regarding corporate leases.. the advantage mainly being taxes, but also having a company car means I don't have to pay for the lease out of my pocket.

Insurance wise, is it more expensive (or the same) to lease the car under a corporate lease? How much of a difference does it make?

Is it more expensive to do a corporate lease than a regular personal lease?

My two options are:
1) Corporate lease, I receive no change in salary
2) Personal lease, company gives me a pay raise by about $500/month to pay for the lease.

Which option is best?

PS - I'm not terribly concerned about the lease being 100% tax deductible.. the tax advantages are good, but the lease isn't that expensive to make me care all that much.

12-27-2001, 08:17 PM
if all you're doing is driving the car normally, you're gunna get f*cked by the IRS sooner or later. you can't just lease it as a corporation, and drive to your W2 job, and around town for fun. if you are self-employed, and drive it to your 1099-based jobs, then you can deduct mileage (~32 cents/mi) as well as the lease pmts.

so unless you want to pay penalties, try getting a vehicle allowance from your employer.. (and i wish i had your salary if you don't think $500/mo is a lot to deduct from your income! :D )

12-27-2001, 08:40 PM
What exactly is a vehicle allowance? Is that the same as the pay raise to get the car?

I own the company. The car is legitimately used for business (going between the two offices.. about 140 miles, and also to visit clients). The actual tax benefits are something the accountant can handle.. even if only 40% is deducted or something.

I guess I'm just trying to figure out what entity will be paying for the lease.. in some ways it doesnt make a difference.. or does it... I don't really know.

12-27-2001, 08:47 PM
Also, while you can't count driving to work for a W2-based job, you can count driving between offices. This has caused a lot of folks to get assigned to a home office which becomes a true satellite office somehow, so then driving between home and the main corporate office is deductible. But, this means you have to work mainly out of home.. not too hard for many folks tho.

12-28-2001, 08:05 AM
In the past, I have leased and purchased vehicles through my own corporation. While I was able to save some tax, the costs for insurance were more expensive. It was still beneficial, nonetheless.

The advantage of leasing vs. purchasing is that you don't have to depreciate the vehicle with a lease. It's built into your lease payment.

A car allowance might not be that great. Since, I beleive you may have to pay taxes on that money as income. Not sure... your accountant could tell you in a second.

12-28-2001, 11:28 AM
Originally posted by jw

A car allowance might not be that great. Since, I beleive you may have to pay taxes on that money as income. Not sure... your accountant could tell you in a second.

sure's income.

12-28-2001, 12:00 PM
If you lease the car through your corporation, the lease would be completely deductable as a business expense for the corporation. However, by the law, you could only use the car for business purposes. Unreported personal use would constitute tax evasion. Personal use would be reported as income. If you leased the car yourself, the allowance from the employer would constitute income. You could however take a standard deduction of $.34 a mile (in 2001) on milage used for business purpose. On the other hand, you have the option of accounting for all expenses related to the vehicle. (i.e. lease payment, gas, oil, insurance). These expenses are deductable for the percentage of total miles that were used for business purpose. Regular commuting does not constitute a business purpose and is not deductable. You may deduct milage used going from your job to a second job, but not from the second job to home. You may also deduct milage from your home or workplace to an alternate work location. (i.e. from your job to a clients place of business)

Please do not take this as tax advice. I am not a CPA. I am an undergrad Accounting major that just got a B in tax accounting. I guess doing this just makes me feel better about myself.

You should consult your CPA before making a definite decision.