depreciation

Getting a New Car for Business? Buy or Lease? Part 2: Tax Consequences

This blog will address the tax consequences of both leased and owned vehicles used for business purposes. Hopefully, it will offer some insight into the decision as to what is best for your business: buying or leasing?

With both owned and leased cars, any related expenses may be deducted using the standard mileage rate or the total amount of actual expenses. If the vehicle is owned, you may choose the standard mileage rate in the first year and switch to the actual expense method in a later tax year. If a vehicle is leased, you may also choose the standard mileage rate in the first year but once you the standard mileage rate is chosen, it must be used for the life of the lease.

Getting a New Car for Business? Buy or Lease? Part 1: Leased Vehicles

Many business owners rely on transportation to achieve the goals and purposes of their business. A car purchased for use in a business has certain tax advantages for the owner. However, many business owners are now leasing cars for business use. More Americans lease autos than ever before because of attractive monthly costs and the ability to change cars frequently to keep up with new technology and safety features. But what’s better for your business, an owned or leased car?

Trump’s Tax Plan Then And Now, Part 2

Every American taxpayer is waiting to see what specific tax plan Donald Trump will implement as President of the United States. The first part of this blog addressed the differences between Trump’s 2015 proposed tax plan and his current 2016 tax plan. While there are differences, there are, of course, the constants in Trump’s tax proposals, which demonstrate the tax policies that Trump has emphasized as important from the beginning of his presidential candidacy.

Tax Treatment Of Lease Terms Part 2: Tenant Allowances

Tenant construction allowances are a common detail in commercial real estate leases. Because landlords need tenants to fill their commercial spaces, and tenants need to customize these spaces for their business, a tenant allowance is a vital lease term which significantly pushes forward and finalizes a commercial real estate leasing transaction. An allowance must be structured accordingly to avoid undesired tax consequences.

I.R.C. § 110 provides landlords and tenants with a safe harbor which ensures that a tenant is not required to recognize income for a tenant allowance in leases which are for 15 years or less of a retail space. Otherwise, the tenant treats a tenant allowance received from the landlord as ordinary income, while depreciating assets over their useful life, typically resulting in much more income than expenses.

Tax Treatment Of Lease Terms Part 1: Lease Inducement Payments

The relationship between commercial landlord and tenant is often fraught with complications which often arise from a failure to understand the legal consequences of some formal or informal arrangement within the landlord-tenant relationship. To understand, avoid, and, at the very least, minimize these consequences, commercial tenants and landlords should avail themselves of the experience and knowledge of a qualified tax professional.

A common arrangement between landlords and tenants is a lease inducement payment, made by or on behalf of the landlord to entice a tenant to sign a lease agreement. Lease inducement payments may be:

  • cash;
  • moving expenses;

Testimonials

Categories