I’ve got a bit of a different question and am sure there will be someone with expertise in this area.
I, as an employee of a company, have been tasked with arranging a couple auto leases for a couple ex-pats that will be working for the company once their work visas clear.
Is arranging/negotiating a lease on behalf of a corporation (LLC) different that arranging/negotiating a lease for personal use? If so, how so?
Also, it seems that Toyota will be the preferred brand to lease from (you can guess where controlling entity is located), but there may be some wiggle room on thT for something that is compelling.
The top models controlling interest typically looks at for ex-pats working in the US is either Camry or Rav4 (again, a compelling deal could adjust that). Also, one ex-pat would likely stay under 10k to 12k miles/year, but the other would likely blow through that (25k plus/year). Perhaps a buy would be better on one or both? Also, these two ex-pats would likely be in the US at least 5 years.
Any ideas/info would be much appreciated. This forum is an awesome source of information!
Thank you
I’m no tax expert, but I feel like buying would be the better option here, no? Especially for the one with heavy mileage. Your TCO once you dispose will probably be lower on a purchase.
That said, I don’t know how the entity intends to treat it tax wise. Can they (or do they plan on) deducting lease payments some how that would dissuade them from a purchase?
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The new(ish) lease rules for accounting now make the tax considerations “different” than in the past. If we lease, we’ll essentially have to treat the PV of all the lease payments as an asset, with a commensurate liability on our balance sheet. So rather than deduct the payments as they happen on our taxes it’d be tax depreciation, which could be more or less over the course of 5 years depending on bonus depreciation rules and the lease’s RV…
Definitely something to lay out.
Thank you!
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IMO, it would be easier to just give your expat’s a stipend (grossed up for taxes) to allow them to get into their own leases. Or a one time bonus (plus taxes) to cover their purchase of a Toyota.
Maybe your company can serve as a co-signer on the lease, but not actually take on the lease liability. Also, some specialty service providers offer expat leasing services without the lessee needing any USA credit history.
Executing a expat fleet is tough enough as it is. Trying to tax-optimize it for a paltry two units doesn’t seem like a good use of anyone’s time.
I suppose another alternative would involve the “Rent a Toyota” program and literally roll these expats between vehicles so frequently no interpretation of ASC 842 would attach. One of these Toyota dealers should be in your company’s zone. Although I think this type of fringe benefit is taxable so you’ll still need to gross up their expat $ + taxes to not have it be a drag on their earnings.
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