- To be considered a commercial vehicle I’ve heard that it has to have a GVWR >6k pounds. Such is the case why many lease big SUV’s and Trucks. Can you confirm?
No. Anything can be a commercial vehicle. However, large trucks like that qualify for extra incentives and depreciation acceleration, but that is only if you purchase the truck. Does not apply to leases.
- What if the company is for legal and marketing purposes, with little to no P&L?
Again, MBFS may not ask for a P&L, but they can.
- Do you know of other makes which may be as lenient/helpful as MB? Such as LandRover, Lexus, Audi, etc…
All the luxury brands are familiar with this process. Business owners leasing cars is one of the most reliable customers they have. When you get to more volume companies, like Toyota or Hyundai, they may be less familiar.
- Again-from what I’ve heard, one is able to write off up to 80% or something of the lease payment. Although I think that’s an incorrect and unfinished statement. Please briefly advise in practice how this works.
You can take the entire lease payment as an expense, as long as you treat it as a perk for the executives. THis is where that deal comes into play. If you sign an agreement with your own company that states the company will pay the lease, in exchange, you must pay insurance, maintenance, and upkeep, then the lease can be a full expense. Basically the company is letting you use the car for personal purposes, as long as you agree to take care of it.
However, if your business is just a fake company with no income, you run the risk of being audited, and they IRS may see this as income to you, and tax you on that - which is bad. If you run a profitable business and this is a legit expense, then an audit is unlikely.
What you really should do is pay yourself from your business. Make all your income come through the business, pay taxes on it, then a lease like this is no big deal. However, if you’re creating a company just to get tax benefits, the IRS will see this and may audit you.
My business is sizable, and modestly profitable.I also pay myself a salary. I have also run it for 22 years. So, leasing is just another way I compensate myself through the business.