I mostly just read posts, but today I started trying to justify a purchase of another hot rod which is the purpose of my post, and thought I would pick everyone’s brain. I own a small business and I would like to know if anyone here on the HAMB has purchased or built a hot rod used to market a business. I commonly see shop trucks and wonder if such trucks are considered marketing expenses for a business or do they deduct typical vehicle expenses when they use the vehicle for business purposes. Any thoughts or input would be much appreciated.
When I asked my accountant to write off my '32 for advertizing, the IRS had recently dis-allowed autos as a business expense, but not trucks. In a surprise to me he wrote it as a '32 pickup and setup the depreciation schedule. On the other hand I drove my actual shop truck from home to work and back. I had to claim 20 miles a day as personal.
possibly not relevant in the USA, but maybe something to consider : Over here it is allowed. (New Zealand) I was trying to purchase a ‘40 pickup for a farm truck. Perfectly acceptable to do all the tax deductions, claim gst back after purchase. If used for private use, you pay taxes on that. But when you sell it , you have to pay back the gst and if you sell for a profit you have to pay tax on any profit. Disclaimer: This is as my accountant explains it, and may not be correct today. Something to consider; as the value of these old cars generally goes up, longer term it may not be financially viable, so maybe that changes how to view it. ended up buying this, it replaced my ute, not a ‘40 pickup, although I did use it as my farm vehicle while on the farm, used it weekly to pick up farm supplies, but only claimed the relevant running costs, no depreciation or gst, due to reasons stated above.
Yeah you need a good accountant as I’m sure it varies place to place. If you write it off as advertising it’s going to have different options than if you register the vehicle to the business.
Hello, Your tax prep guy can tell you what is inclusive with the tax write off. When we had our skateboard/scooter business, the best way to advertise it was to put something on the side of the hot rod/cruiser. Painting a design would be the best as the tax prep rules state that it has to be permanent. Without going overboard on big letters and phone numbers, there has to be some consideration of style and substance. Small lettering on the rear door would take care of that end. plus, it had to be secure for storage and deliveries. Our El Camino was good, but lacked security of the wagon. We had flyers made and even advertised in the local dealer's sports magazine that was sent to all sporting goods shops in our area of Orange County. (Coastal) We had our local sign maker do a preliminary design in what was a magnetic sign to be put on each door of the El Camino and then, could drive around with the signs on the doors. But, the tax guy said we had to have it permanent. Why? A business can use a family car, but with a permanent sign, then we all know it is used for business and not just pleasure for tax write-off purposes. So, future plans for a station wagon were out of the door. It was not a permanent business until it started booming. We sold several to friends and then to several skate shops. We even had one shop in the Dana Point Harbor buy a bunch for sale and to use in his rental business. This was the biggest order and I was hard at work making more versions, including an adult version. My son and I would go to the shops loaded with samples and give demonstrations on our own scooters. When the store owner saw my son blasting out on the sidewalk, they wanted to see more samples. When I got on my own larger version for adults, (larger, taller handle + wider board and trucks for stability) it was a done deal. A custom adult version (still in our garage attic, today) For many years of going to a mile long walk on a paved trail to a southern coastal surf spot from the parking area, I strapped my short surfboard to my back, grabbed the handle for security and zipped down hill. It was always a thrilling ride, especially if it was in the breaking sunrise and still a little dark. Jnaki “…one of these guys is doing his own thing…” But, as all good ideas came to fruition, our neighbor, who was a lawyer hit us with a reality check. Do we have insurance? Yes, for life insurance, but, No for the business. He told us that it was minimal to get a $1 million dollar insurance policy just for the business. When a person suing for damages sees a million dollar insurance company in court, things change. Otherwise, they come after your house, cars and whole life style to pay the costs. It was going to cost $15k for such a policy. We were having so much fun with the business and pleasure riding with friends. The business plan was working well and reality was staring us in the face. Is it worth it to have someone sue us for damages from a product we made? The added cost for security was horrendous for our young family. That threw us for a loop. We closed the business and bought all of the sold products to friends and businesses, back for cost. It was less than $15k, but the incentive for further development was put on hold. History sits in our garage attic... Note: you will notice the design of the handle is in the back of the axle. Any portion forward causes a front end tip over on any surface. Too much weight forward. Also, the rear tail area had a custom ball bearing street wheel that turned. It had a two fold purpose. It kept our son from falling backward if he was too far back on the board. Plus, it allowed him to make turns quicker and use it as a brake if necessary. You go, but you also must stop at one point in time… Note2: Within a year, a new product from a huge corporation hit the market with plastic pop out models and sold them to toy stores. Obviously, they had insurance for every product from the corporate headquarters. Then of course, we all know that a company hit the market many years later with wheeled product that almost took over the world, “The Razor, kick scooter.” If only… YRMV
I used my '54 as a business billboard for over 20yrs. Had the perfect spot for an office, ample parking right in front of our office which faced the main street. We got to be known as "the old blue truck guys". We received more new business from it than any other source. When people would ask for directions, we just said to look for the old blue truck. I ended up buying a '49 flat bed Chevy and a '51 3100 for additional exposure.
Great feedback! Yes, I will definitely check with my tax accountant but wanted to read experiences from my fellow hambers.
Years ago had a customer that bought a 56 Nomad for his wife's flower shop and had the store name on the rear side windows.
Put a logo for my design service on a couple of mine. Never claimed a rite off, but always asked what I did at shows. House , additions and garage designs.
My only input, which varies from different sources, if you depreciate something like a vintage car once it hits the end whatever you sell it for is a capital gain. If you spent post-tax $$$$$ on something and simply sell it, break even, you really want to pay a tax on that? You will if you pledge it as an ***et, depreciate, then sell it later. The whole nut. Will the tax savings over time offset that? Only your hairdresser knows for sure. It's a box I never wanted to fill. I think it's better to deduct some expenses over time for the use vs letting the company have it, expenses like travel, exhibitions, repairs, etc. At least your initial cash isn't taxed...AGAIN. This is a huge oversimplification, and as always your results and cir***stances will vary. I'm in the resto biz, never could square it that my personal oldie will become a 100% capital gain. **** that. Buy me some gas or a room at that show, but the company can't have it for its own. I suppose there's angles for bigger operations but my mom n pop level didn't make sense. Study your own tax codes and regs, my opinion is worth about triple what you just paid for it...
I had this painted on the side of Rusty. I don't have an actual business but it gets a lot of attention in town.
theHighlander makes an excellent point. If you depreciate an old vehicle completely, and then sell it, you'll owe taxes on the entire amount you sell it for. On a new or late model car, this can still make sense, because by the time you're ready to sell it, it generally isn't worth much, if anything. But an old car will appreciate in value. So the tax advantage you got up front gets wiped out by the taxes you pay in the end. Also, if you're going to depreciate a vehicle, the business needs to make enough money to take advantage of that depreciation. If you've got a pretty successful business then it's great but if it's a small hobby type business you're not really saving much on taxable income. Thirdly, the mileage deduction in the US is like 58 or 60 cents, but you can only take that on a personally owned vehicle. If you depreciate it, you don't get that. If you're going to paint up an old truck and keep it parked out front, the mileage won't mean ****, but a shop truck that was bought cheap and gets a lot of miles put on it, you're better to own it personally and take the mileage deduction. My '57 Chevy regularly hauls packages to the UPS/USPS/Fedex dropoff points and I can claim those miles, makes more sense than writing off my $300 purchase price. Certainly, a company can own an old car or truck, and there can be tax advantages to doing that. But how you plan to use the vehicle and what deductions you take can really change the equation.
I bought my 1950 Chevy panel truck from a lady in Phoenix who owned some kind of bridal boutique business. It was just used "promotionally", not to haul goods or people. No signs or graphics on the vehicle. Part 2: Years ago, when I had my business, the IRS rules were to depreciate any 'company cars' by 1/3rd each year, so at the end of 3 years the entire cost of the vehicle was written off as an expense and the vehicle was valued as $0 on the books. My habit was to personally buy the fully depreciated car from the corporation for $1000 and get another new one for the corp. The $1000 sale would go on the company books as a $1000 profit. The IRS did not stipulate how new or old the car or work truck had to be. Hey! I don't make the rules. I just play by 'em.
There is a realtor in Ramona CA who has bought several finished cars that he parks on the main highway for advertising (added name onto the doors) - muscle cars, a blown Vette, a monster truck etc etc
I thought about it but I yell at stupid drivers too much and even let the occasional "bird" out the window, best not to have my company name and phone number on my cars.
Many people in town used to ***ociate my hot rods with my welding business. I wrote off a lot of maintenance and upkeep because of them being ***ociated with my shop. They changed the rules a few years ago, and I have since retired and have closed my shop, but I don't think you can write off as much as you used to be able to. I would sure look into it. Back then you could either take miles used, or upkeep as a write off. With old cars, the upkeep was a better way to go. I would not include the hot rod as a company ***et, you get a great write off for 3-4 years, then it costs you money. If you sell it, it really costs you money.
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