How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Megan C Your Own Question
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
23669918
Type Your Finance Question Here...
Megan C is online now
A new question is answered every 9 seconds

I live in KS and am planning on starting a small healthy food

This answer was rated:

I live in KS and am planning on starting a small healthy food vending business. My larger, one-time initial costs will include the vending machines, products and change($) to initially fill the machines, and business (LLC) set-up and licensing fees; all of which will be considered business expenses that may be written off. I plan to just charge mileage on my vehicle at the current reimbursement rate while I drive to and fro to fill/service the machines. However, I am also planning to trade in our 2010 sedan on the purchase of a full-sized truck to haul products and occasionally tow a trailer to move my machines as needed. My question is this: can I also write-off, as a business expense, the additional cost of purchasing the truck (after our 2010 trade-in), which I will also use for personal use a portion of the time? ...a majority of the time (i.e. > 50% of the time for personal)?
Thanks, Kirk

MyVirtualCPA :

Hello, Kirk and thanks for your question

MyVirtualCPA :

You can only write off a portion of your truck purchase that is used for business purposes

MyVirtualCPA :

You cannot write off the entire purchase amount.

MyVirtualCPA :

You can choose either the actual expenses method, or the standard mileage method to write off deductions on that vehicle as well.

Customer:

I am only planning on using the delta between my trade-in value and the final purchase price of the truck (will be used).

MyVirtualCPA :

Also, you can't write off the entire purchase in the year of the purchase - you will have to depreciate the purchase

Customer:

It would be this delta cost amount that I would proportion relative to the ratio of miles driven for business vs. total miles driven, correct? Or proportioned based on time used for business vs. total time used? Which method is correct? or is either method correct? I am planning to use the standard mileage method; will this then negate my ability to write off a portion of the delta cost, or not?

MyVirtualCPA :

You would take the total cost of the truck, and take that cost over 5 years - and then take that expense and multiply it by the ratio between the business use miles and total miles

MyVirtualCPA :

You can use standard mileage or actual expense - but not both

MyVirtualCPA :

So, if you use standard mileage you could not depreciate the truck purchase

Customer:

Okay; understood. Finally, in your experience, and in general, does one method seem to outweigh the other with respect to minimizing taxes, given all things being equal? Or is one method better for reducing taxes more in the short-term and the other in the long-term? If so, which is which, generally?

MyVirtualCPA :

Generally, over the long haul the standard mileage will give you better tax breaks. In the short time, it's actual expenses

MyVirtualCPA :

I typically stay with the standard mileage approach

Customer:

Thanks; I appreciate you giving your opinion. I think that is it from my side. Any further words of wisdom or tidbits of knowledge?

MyVirtualCPA :

No, not that I can think of...just, when you have received all the information you need, please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

I can honestly do that. Many thanks.

MyVirtualCPA :

You're welcome

Megan C and other Finance Specialists are ready to help you
Thanks, Kirk for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.