It’s not too complicated and the entity form does not matter (sole prop v. LLC v. corp).
- You will be able to deduct a proportionate amount of expenses for business v. personal.
- You can use the “actual expense” method or the “mileage” method.
- If you choose mileage you can change to actual expense later but if you begin with actual expense, you cannot change back to mileage.
- You cannot deduct the costs of commuting.
- Generally, the more expensive the car, the more likely it is that the actual expense method will benefit.
- Generally, for older cars that you are driving a lot, the more likely it is that the mileage method will benefit.
You should talk this over with your CPA in the year you are putting the car into service.
I was planning to deduct the costs of commuting since I have a home office. That is, all commuting would be work to work. What am I missing?
Also, if I take a Tesla loan instead of paying for it in lump sum, does that change the deduction for the car? That is, would I write off just the loan interest per tax year or write off the purchase price (say 70k for example) in 2018?
I was planning to deduct the costs of commuting since I have a home office. That is, all commuting would be work to work. What am I missing?
This is kind of dicey; I would have a difficult time justifying the cost of a luxury car as an ordinary and necessary business expense. Is this your full-time job or a side gig?
It sounds like your home office might be what you use to manage your side income. The side income would have to be made while at work in your home for your home to qualify as a valid home office location in the eyes of the IRS. If you only use the home office to keep records and so forth, then it will not be accepted as your principal place of business for that side income. The details matter. I considered something similar and my accountant enlightened me regarding my false impressions of what qualifies as a home office.
I was planning to deduct the costs of commuting since I have a home office. That is, all commuting would be work to work. What am I missing?
This is kind of dicey; I would have a difficult time justifying the cost of a luxury car as an ordinary and necessary business expense. Is this your full-time job or a side gig?
Side gig. I would have my typical W2 doctor income plus 1099. I would deduct all the business expenses on the 1099. I do not think anyone would argue that a Hummer is ordinary and necessary, but people were definitely successfully deducting them.
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