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View Full Version : customer found a way to deduct his $60,000 Porsche as a business expense?



huggytree
01-14-2012, 09:42 PM
one of my high end builders needed some work done on his house....i was shocked when i arrived and found a run down 'basic' ranch when he does multimillion dollar houses....buuuuut i noticed a late model Porsche on his driveway....so i had to talk about it being a car guy

turns out he is in a 'autoclub' and uses it for connections for business.....he writes off the club dues and the car.......says he gets a house every year or 2 from the club...since his houses are 1,000,000 to $5,000,000 getting 1 every other year may be enough to survive and do well

i think he is either BSing me about the car write off or has never been audited...im in some car groups myself and never thought i could deduct my cars.....i also dont like to hit up others in the group because its tacky

Evan
01-14-2012, 11:14 PM
Depreciation on luxury cars is limited, and it'd take many years to fully depreciate a luxury car. Depreciation for luxury cars is capped around $3K a year even if it is deductible and "100% for business" which I doubt.

Also, in accordance with Section 274(a)(3) of the Internal Revenue Code, club dues of any kind are NOT deductible. If they wish to take a deduction, it needs to be included in the income of the employee with the benefit. So all social, athletic, sporting, luncheon, airline, and hotel clubs are not deductible expenses.

Steve B
01-15-2012, 04:09 AM
Just because he takes the deduction doesn't mean he wouldn't get nailed at an audit. I have lots of people pay for my services with their company check. I'm guessing they are going to try to put the expense against the company books. I can't imagine a situation where a dog fence would be a business expense.

Given his logic - he could justify just about anything as a business expense. For instance, if he didn't eat food in the morning, he wouldn't have enough strength to leave the house and talk to his customers - so I guess his food expenses help his business also. Of course, his potential customers are going to take him more seriously if he's wearing nice clothes etc.

huggytree
01-15-2012, 08:15 AM
im on a trap shooting league with a builder of mine....my accountant deducts the expenses....i dont know if i get full reimbursement, but its considered the same as taking him out to eat for a business dinner


i know his Porsche isnt a legal business expense, but if he gets customers from his car club and can prove it i dont see why that isnt

billbenson
01-15-2012, 01:42 PM
Evan, if I had a field sales job covering the state I'd probably buy a Porsche or a 4 door equivalent. I'd do it because I like Porsches, but you also want to put people in a nice car. Actually a Porsche might really be a little "showy" for a salesman, but if I spent all day in a car as a field salesman, I'd still probably do that at my stage of my career.

In an audit, would you be able to write the Porsche off in that situation?

Evan
01-20-2012, 09:02 PM
im on a trap shooting league with a builder of mine....my accountant deducts the expenses....i dont know if i get full reimbursement, but its considered the same as taking him out to eat for a business dinner

i know his Porsche isnt a legal business expense, but if he gets customers from his car club and can prove it i dont see why that isnt

Business expenses must be REASONABLE and NECESSARY. Not "or".


Evan, if I had a field sales job covering the state I'd probably buy a Porsche or a 4 door equivalent. I'd do it because I like Porsches, but you also want to put people in a nice car. Actually a Porsche might really be a little "showy" for a salesman, but if I spent all day in a car as a field salesman, I'd still probably do that at my stage of my career.

In an audit, would you be able to write the Porsche off in that situation?

In an audit, anything is possible. The problem isn't whether the Porsche is deductible, it's just you're limited in the amount of depreciation you can claim.

Elwin15208
02-10-2012, 11:36 PM
The OP did not say what type of Porsche, but if it was the Cayenne Turbo, the customer may have taken advantage of the tax deduction written about here: How To Take A 100% Tax Write-Off For A New Porsche, BMW or Cadillac - Forbes (http://www.forbes.com/sites/janetnovack/2011/04/08/how-to-take-a-tax-write-off-for-a-new-porsche-bmw-or-cadillac/)

Evan
02-11-2012, 05:40 PM
There are a few things which are factually wrong with that article... But print it out if you decide to go down that path. You can try suing Forbes if you get audited.