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If I have a personal vehicle, can I write of 100% of a leased business vehicle?

I am a W2 employee, and have an LLC.

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4 Replies

If I have a personal vehicle, can I write of 100% of a leased business vehicle?

Actually, if you have what the IRS determines to be a "luxury" auto, you can never write off 100% of the lease cost but you can use the standard mileage deduction of business use miles as an alternative.

For a leased vehicle the 2018 tax law changes made it more likely that you will be able to deduct all or almost all of the lease payments in the year made.

REMEMBER:  What follows is for the percentage of the business use of the leased vehicle, so the lease cost must be adjusted to reflect that!!

If you lease a car, light truck, or van for your business, special tax rules may limit what you can write off.  When leasing the vehicle, deductible lease payments must be reduced by an inclusion amount. The IRS has announced the numbers you need to know for 2018 (Rev. Proc. 2018-25). https://www.irs.gov/pub/irs-drop/rp-18-25.pdf  

Inclusion amounts
There is  no inclusion amount if the value of the vehicle first leased in 2018 is $50,000 or less.

Due to the increased depreciation allowance, the inclusion amounts have been changed. There is no inclusion amount if the value of the vehicle first leased in 2018 is $50,000 or less. Inclusion amounts begin when the value of the vehicle first leased in 2018 is more than $50,000. In contrast, the inclusion amounts for vehicles first leased in 2017 began with cars valued at more than $19,000, and trucks and vans valued at over $19,500.

Clearly, only a "luxury vehicle" results in any substantial inclusion amount [that is a reduction in the amount of the lease payment that you can deduct!]  

  • Example:  A BMW with MSRP of $70,000 would have a sequence of inclusion amounts for years 1-5 of:
       Year One $57   Two $126  Three $187   Four $225  Five $259

  • Example:  A Tesla with MSRP of $89,000 would have a sequence of inclusion amounts for years 1-5 of:
       Year One $102   Two $225  Three $379   Four $454  Five $525
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

If I have a personal vehicle, can I write of 100% of a leased business vehicle?

If it is used 100% for deductible business miles, yes.

Anonymous
Not applicable

If I have a personal vehicle, can I write of 100% of a leased business vehicle?

the mileage you drive/percentage of use  as an employee is no longer deductible in 2018.  so your LLC deduction will be limited to the prorata mileage drive for that business.  

If I have a personal vehicle, can I write of 100% of a leased business vehicle?

same problem for those used to filing Form 2106!!
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67


NOT INTUIT EMPLOYEE
USAR 64-67 AIS/ASA MOS 9301 - O3

- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

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