Max Out Auto Deductions Before Year-End | Plus Q&A

Everyone. And we're here to bring you a present, and that is tax savings. Some tax write offs before you're in. I'm here with the illustrious Matt Sorenson and we're going to talk about maybe writing off an auto before you're in. Some auto deduction strategies. Is it a good idea what to look for? And then we're going to just do open Q and A. So if you've got a question about what tax write off might work for you in the next 10 days, let's. Is it 10 days, eight days? What is it, man? I don't know how. 10 days.

You're in trouble, man. It's going to be 20, 23 in.

Yeah, I'm starting Christmas shopping tomorrow, so I gotta get on it, you know.

Yeah. And, but seriously, December 31st, I mean we're. These are tax gifts, but a lot of these matter by December 31st. So we're at the 11th hour, so to speak. But this is a great time of year to be thinking about it. Maybe you're gonna, you know, have a December to remember and have a new Lexus, I don't know, in your driveway.

Apparently some people get a new car in the driveway. I see the commercials. Okay, so let's give you the rules. I'm going to be sipping on my eggnog here.

Oh, love that. Do you go mixed in any milk or do you go straight? Is that.

I've got a little ice in it. You know, it just kind of cuts it just a little bit, keeps it cold. But I got my props here. I mean, I'm going to be skiing the, you know, later today. So I just, you know, I just want to let you guys know this is, I'm finally, I'm working half days or more, but. Okay, let's hit it. So here's the number one issue. And Matt's got a hack, what do you call it? Auto hack. An auto loophole that many of you are going to love. But let me just set the stage with this. Every freaking year I get someone that calls me, I'm not kidding on my cell phone from the auto dealership and says, mark, I'm down here buying an F150 or this new Silverado or this new SUV. I need a tax write off. Should I do it? What's my write off? And I go, and I go, do you need an SUV or truck? Have you seen the gas prices? You really need this? Well, no, but I want a write off. And so here's my, you know what they want, Mark.

They want a write off. They also want permission from their husband or wife, whoever is here, the spouse to be like, you know, the CPA said we should do it. We're pretty much making money here.

Yeah. Back in the good old days, I learned a hard lesson of not answering that because then I get hate mail from the spouse the next day. You're right. Like what the hell? But anyway, so here's the theme. Do not let the tax tail wag the dog. Now someone this morning asked me, what does that mean? That means we don't want to make a tax decision. That could be good, you know, going and buying a big old truck or SUV or even a car. I'm going to go through the numbers here. You could get a really killer write off. But is it a good economic decision? Are you letting the tail wag the dog? Which apparently is sweet neuro movie but we do not want to let the tail wag the dog. That's what we're worried about.

Yeah. So. But in other words, do it though. If you are looking for a new vehicle, especially if you're in the market right now anyways, you're like, I could use a new business vehicle. Because you know what? In 2023 the rules aren't as sweet. So this is a little opportune time right now, I think to really focus on this for any of you in the market. Or you're thinking, I got to do this next year.

No, if you make a poor decision, then you got to wear the naughty hat because we're going to have a problem. You're going to be in trouble. If you go out and buy a vehicle when you really don't need it. So now what are the write offs? Should we do that, Matt, or do you want to get. Let me get the write offs and then you give your tax hack. Should we do that?

Yep, let's do it. Let's hit the 2022.

Yep. This is the handy dandy Mark J. Kohler 2022 calendar. You can get to my website@markjkohler.com and get the 2023 pre order. It is at the printer right now. And in here I have a page that gives you all these sweet tax write offs for small business owners and all of you that have a side hustle or whatever, you got to get this 25 bucks. Great. It's, it's got sweet all the deadlines for the year. It's awesome. Okay, so here's the deal. This year, this is a big deal. You're going to be Able to take a $8,000. In fact, I've got even another an $8,000 bonus depreciation right out of the gate. So if you go buy, let's say this, okay, if you go buy a car or a truck or an SUV, you get what's called bonus depreciation, 100% of what your personal use of the car is. So if you're going to go out and buy a. Could be new or used, could be with cash or credit. Doesn't matter. It could be in your name. It could be in the business name. Does not matter. The IRS does not care. So let me repeat that, everybody, cash or credit does not need to be in the business name, but you have to use it for at least 50% or more for business. Now, some of you are going to maybe go auto mileage because you don't use. You put on a lot of miles and you're like, I don't care if my business use is over 50%, I'm going to put on a lot of miles. But if it's over 50%, then you get this bonus deduction. And I'll give you the numbers here, and they're pretty sweet. And. But you got to be careful. The car and the truck and the SUV are going to have some different limitations. Matt, I grabbed those numbers. You want to hit the electric vehicle while we're on? I mean, that might be something sweet to get here.

Yeah. Now, here's another thing. Now, this was the Inflation Reduction act, if you guys remember that, that wasn't really about inflation reduction, but it had some cool tax benefits in it for us. So one of which was the EV credit, the electric vehicle credit. Now, this does not necessarily. I'm going to give two versions of this. This does not need to be for business. The first EV credit is just government's incentivizing us to buy electric vehicles. Now, traditionally, the EV credit had to be for new only. You could only get the EV credit on new cars. But under the Inflation Reduction act, starting in 2022, this came into effect in about August. There's an EV credit now for used cars as well. Now, there's a couple different requirements on this. You want to be careful. Make sure you're buying a car that qualifies because it's got to have a certain amount of components and assembly in North America and stuff like that. So not all autos qualify. The best way to find out what autos qualify, by the way, is fuel economy.gov, fueleconomy.gov, you can look up the specific car you're interested in and see what electric vehicle credit is. Now this is a tax credit, of course. So this offsets any federal income tax you owe. For the new. It's a $7,500 credit that you get. 7,500 bucks for an electric vehicle. This is plug in electric vehicle. For used, it's up to a $4,000 credit. Now again, be careful on the cars you're doing. Go to fueleconomy.gov you can see they even outline which ones can get which credit. Or some partial credits even. Now, the nice thing about this was the government, the IRS and Congress, I should say, really said, let's expand this. The old EV credits would phase out. Each manufacturer got a certain amount of credits they could get, and once people bought enough of them, they didn't get anymore. It was super confusing. Now they basically said we're not putting a cap on it necessarily based on manufacturer, but. But it's got to have a certain amount built in North America. And, and we're also going to allow it for used, which is totally new, but okay.

Now, Matt, I'm starting to wrap a present here. Don't look, it's for you, but I'm going to start wrapping this present here because you got to freaking hit the point, people. If you want an electric effing vehicle, do it through your business. That's the trick.

Let's hit. Wait, wait, wait. No, I don't get there yet. And while you're wrapping my present, is there keys in there or what are we dealing with here? Is there keys? I don't know, maybe a Tesla, I don't know. Well, here, let me say this on the EV credit because I want people to know this. Some of you are like, I could just go grab the EV credit. If you're high income, you don't get this. 150,000 single, 300,000 married, you can't get this. The government's like, we're expanding the EV credit, but not for high income. We're getting rid of it for high income. But the hack. Let me get to the point here, okay? The hack is there is a business separate electric vehicle credit. It's called the commercial EV credit. And that is different. It's actually can go over 7,500 bucks. And you don't phase out if you're high income. There's other qualifying stuff there. But I just want to say for you that looked at the EV credit, you business owners, you'd be like, ah, I make too much Money I phase out. Ah, consider the commercial electric vehicle credit which if you use the auto in your business, it's commercial and you can qualify. The credit can even be more than 75,500 bucks.

I love it and I'm just. Thank you for your patience. But we got a lot of questions piling up because everybody, we're here for you. We're going to do live Q and A here in a couple of minutes. But Matt was the one that really figured this out and I loved it because as soon as this law came out, they made it easier to get an electric vehicle, but it phased out for even middle income earners. That's my point is it's not even high. The limits are not that great. So you're going to phase out and not get to get the credit with an electric vehicle. But for all of you and you're our tribe at entrepreneur at kkos, here with Matt Sorenson and Mark Kohler, you're small business owners. 40% of Americans now have a side hustle. Let's get that electric vehicle in your business. And now the write off is, could be huge. So electric, skilled with the business. Matt, great summary. Here's your present. I will be sending this to you. I want to, I want to take care of that during our show today.

I think you're, you know, you're just multitasker getting stuff done. I appreciate get that on Santa's sleigh. So it's there Christmas morning.

I appreciate now, now here's the numbers. If you want to go out and then we'll get into our Q and A. If you want to go out and buy a car and you can, and your business use is over 50%. So you could buy a $40,000 car, new or used, let's say, and your business use is 80%. Okay, so that means you take eight grand off the 40. So that means you have $32,000 of business car. Your, your car is 80% business, 20% personal. So if you have a $40,000 purchase, 32,000 of it can be written off. Well, in 2022, if you go buy that car this week, new or used, whatever, you can take a tax write off in the car of $19,200 plus moving forward, fuel, repairs, maintenance, all of that. And the interest on the loan can be a write off, $19,200 right out of the gate. That's a $20,000 write off. Boom. But you're not going to be doing mileage on that car. You can't switch back to the 62 and a half cents mile rate, you're going to be just doing actual. Now, if you do an SUV or truck, that $8,000 plus the 11 2, which gets us at 19,200, that bonus of 8, plus the depreciation number. That's what I wanted to pull. If you do an SUV or truck that weighs more than 6,000 pounds, you can write off 100% of the business use. Again. So let's say you buy an $80,000 truck or SUV, new or used. That's one heck of a used truck or SUV, by the way, weighs more than 6,000 pounds. Let's say it's 80% business use. So we're going to take off $16,000 on that $80,000 vehicle. That puts us at 64. So now you've got 64,000 that you can write off like that.

Yeah.

That's why I get a phone call from people at a car lot going, should I do this because they want that write off.

Yeah. Now, do we miss some of this, though, in 2022? Like in 2023?

In 23, yeah. It goes down, doesn't it?

So, but it starts phasing down. But it's still good. But that's why we say if you're on the bubble right now, get it done before 2022, because the amount of bonus depreciation you can take is going to start going down a little bit. Still there. But I love these strategies, the auto strategies. Again, we don't want the tax. Tell the wag the dog if you otherwise need the auto or, or looking for a new car. But this is just, you know, one of these. You can get the new vehicle. That's a gift. Then you get the tax deduction, benefits. That's a gift. It's just the gift that keeps on giving. Clark, you know, I want you to get something nice too this year.

Matt, I want to get something for you real nice.

Yeah.

Thank you. All right, now, final point here. We're going to go to live Q and A. Let me say this now, if you are a tax professional watching, listening, and enjoying this, Please know that January 1st I am launching my certified tax advisor. The Main Street Tax advisor certification will start January 1st. I've already got signups and people ready to go. January 5th is our first live training. I'll be doing live training with all of my group every week starting the first week of January with over 79 videos. Little easy, don't get stress out exams to be certified. And when someone calls and says, I need A cpa, Mark. Because some of you watching this are like, I need a cpa. My certified tax network, they're going to be rolling off the shelf by the end of January. Certified and ready to go on Mark Kohler strategies, which aren't revolutionary but they're freaking street smart. So check that out. There's a link down below. So any of you enrolled agents, CPAs, tax advisors, financial advisors, and you just want to go next level on your tax strategies, get to that link below. The new calendar is in the links below. And please give us a like or subscribe if you're, if you're enjoying this. So okay, now James, let's go to our first question. Is that. All right, Matt, you were going to say.

Yeah, well I was going to say one thing on the mileage, remember I think you got the update right. Just the IRS announced mileage for 2023 is going to stay at that 62 and a half cents. So remember any of you that had auto use over, you didn't even buy a new vehicle but 2022, you had use of your vehicle. The first half of the year was 58 and a half cents. The second half of the year. Yes. You got to break it up. Yes. This is weird. I guess the Iris has only done this a couple times. Like 2011 was the last where half the year was one rate the other half the year was the other. But 62 and a half cents is what you're getting for the second half of the year, the last six months. But that the mileage, remember is an easy method if you're like guys, I'm not buying a new car marking Matt, but I want to get this write off for, you know, my auto and travel. I mean every thousand miles that you have, or I should say every 10,000 miles, that's a 62 cents a mile. That's a pretty huge deduction that you're getting, right? That's 6,200 bucks.

Yeah. And for here's the rule of thumb and I have an article that I produce and publish every January. You can look at my older article, I think Matt's Google today and it came up number four, just type auto deduction strategies if you have the word Kohler is number one. But I'm number four there under a few ads. But I have an article there. We'll put the link down in the description. And I go through seven rules of thumb because some of you are like, well I'm putting on a ton of miles, but it's a lower cost vehicle. Well, stick with miles. With 20,000 miles, you're looking at a $12,000 write off. A realtor out there is going to burn 40,000 miles. So screw bonus depreciation. But if some of you like, well, I don't put on a lot of miles, but it's really used for business and it's a higher value car, then you're going actual. And then I've got five other rules of thumb in there. So look for that article. It's down in the description and. Okay, so let's live Q A. Should we hit it?

Yeah, let's do it.

Okay. James in the studio, the team, Patrick, Alex. Love you guys. Okay, what do we got, man? Yep.

All right, awesome. So first question is from pdr. Many people are advertising to simply buy a car in your business name and get you a hundred percent write off for 20, 22, even if it's not used for business thoughts.

Oh yeah, that's.

Yeah, we got lots of thoughts. I'm going to work on this cinnamon roll, Matt, while you take that first. Okay, that question. I mean, it's Christmas time. If anybody doesn't have a cinnamon roll within hands reach, you got bigger problems. So.

Yeah, yeah, I got problems apparently. But not as many problems as the person setting up some business entity to buy a car and they actually don't have a business and they're not using the car for business. The IRS doesn't care if you have a business and don't put it in your business, but you use it for business. It's still a write off. The point is the auto needs to be used in the business. It's not about having a business entity. And now you get to write it off. That's total bs. Whoever you're following or listening to there, that's giving you that strategy. Stop listening to everything else they say. Yeah, that is dumb. That is a dumb idea. That's basically cheating the irs. You got to learn the rules. So you have to have business use and actually having the business any doesn't make a difference one way or the other.

Yeah, I like it. I'm going to say this one more time. It doesn't matter if you have an entity. It matters how you use the car. Truck or SUV or RV or motorcycle. How you use the vehicle is all the IRS cares about. They don't care who owns it. And if you have an entity or not, the person giving that advice to you is wrong. Here's what I'd love to challenge you to do. Email them and say, oh, that sounds Like a great idea. Will you please personally guarantee in writing that that's acceptable to write off 100% of the vehicle if I put it in an LLC? Will you please put that in writing? And I will set up that LLC with you tomorrow? Because that's probably what they're selling. They're trying to get you to buy an entity and go buy a car to get a write off. Say, put that in writing. We'll see how quick they respond. I'll tell you right now. I put in writing all my strategies. I stand behind them. If you're like, mark, you said it on your podcast. Will you stand behind it? I'll write you a freaking letter. Now. I may make you be a client and pay me something to make sure that we have a client relationship. I think a better Call Saul. I mean, remember that scene? That was an important scene. Yeah, When. When.

Give me a dollar.

Yeah, when Jesse and Walt are digging the hole for the body. They're digging the hole and they're like, we're gonna. He's like, hold it, hold it. You need to retain me as a lawyer. Put. Put a dollar in my pocket. Now, he was tied up at the moment, and they're like, okay. And so they put a dollar in his pocket. Now we got an attorney client relationship. So, anyway, I don't want to be by a hole out in the desert that you're digging before we get that relationship. But, yeah, and it's.

It's going to be more than a dollar, too. But you know what we're saying. He didn't have a. He wasn't in a strong negotiating position there.

No, he was not. All right. He was not. All right.

So we're going to make this one into a question, but it's important. So one of our regulars, Quentin Mason, he says, I want a new C8 Corvette. Exclamation, exclamation. Now, here's my question for that. Can he buy a C8 Corvette for his business? And what kind of business does it have to be for him to be able to write off a sports car?

Now, this is Cory. His name's Corey.

Quinton.

Quentin. Sorry. Quinton.

He's a regular. He's got all your books except for the first book, he says, okay, that's cool.

Quinton, we got to make this work for you. I mean, this is. This is a big deal. So I'm gonna. I'm gonna put on. I'm gonna put on my nice hat now. I'm gonna get legit, okay? So I'm gonna Be nice. We're gonna. We're gonna pull this off, Quentin. All right, here's the deal. A lot of people think that if I wrap a car with advertising, it becomes 100% write off. Wrong. It's how you use it. A lot of people think, well, if I buy a flashy car to get attention for my business, that's a write off. Wrong. It's how you use the car. Now, I could have a dentist with a Corvette or a freaking Subaru. I don't. No offense. For those that drive, or Corvette for that matter, somebody like, I'd rather have the Subaru. I get it, okay? But here's the thing. It doesn't matter what make and model and the cost of the car. What matters are, are you using it for business? Are you driving around customers, employees, picking up supplies? I don't know how much you can pick up at Costco and a Corvette, but you might be able to get a few supplies. That Subaru with the hatchback, you might be able to get a lot more in there. So you may want to go with that, but the Corvette is not the problem. Spend 100 grand, 200 grand, I don't know how much cost. You're. You're going to probably. You're going to have limits. Remember, on the depreciation, you can't write off the whole Corvette because it doesn't weigh 6,000 pounds. So whether I buy a Corvette or a Subaru, my maximum bonus depreciation is still 19,200. So be careful getting the Corvette thinking that you're going to get a bigger write off. But can I write off your Corvette? Sure. Just tell me you're using it for business. If you're a realtor and you drive around people that own Corvettes and. Matt, Matt, Matt, Can I take one more second? Is it cool?

Yeah, yeah, yeah.

I had a realtor that was so freaking fun. He had a Harley Davidson, and he wanted to write off his Harley, and he was a realtor, Mark. I only take out my Harley when I show property. And he marketed himself to other Harley Davidson owners. And so. And he really had a good book of business. And he said, I'm gonna. I'm gonna go out and market real estate to other Harley riders, and we'll go show properties on our motorcycles. So he'd be like, you know, rolling into these open houses with their motorcycles, freaking Hell's Angels, you know, these cute little realtors are like, what the hell's going on? You know, Anyway. But no, he had a great business, and he Rode off his entire motorcycle. Yeah, so I'm. Yeah,

yeah. So I mean, that's a vehicle and that's. And also think of. So Corvette, Harley Davidson, Sam Crow, Sons of Anarchy. You know, they're, they're driving around on their motorcycles doing business too, making deliveries of illegal guns and drugs.

You know, that's a write off.

You know, that's, that's a total. That's business use.

You know that there are criminal tax lawyers. Not. They're criminals and tax lawyers. There are tax lawyers that help criminals because guess what, all those drug runners and drug dealers, when they get in prison, guess who comes and narcs on their, their little bars. Hey, we're the irs. We hear you made a bunch of money as a drug runner. We're going to tax you now.

What?

I thought I was bad enough I was in jail. Nope, you're getting taxed too. And so there's literally. I got recruited to be a tax lawyer and a criminal tax law firm where they go in and help the criminals after they're in jail and the government seized all their assets and now they owe the irs. And they do get a write off for that black suv, all murdered out, ready to go out and deliver. They don't get a write off the cost of goods sold, but they do get a right off of the car.

Well, yeah, they certainly try, but. Okay, so I love that the only thing I'll say on the Corvette is, you know, and this is just a business decision. This is if, if you love the Corvette, cool. And if it helps you sell more or you want a certain image for your business or your brand, and maybe that matters. And like the Harley Davidson's one, the great example, because that person had an angle on the Harley, right? It was like, I'm going to mark other Harley people. And I can see other people would love to go look at properties on their Harley. Like, we drive around, we roll up that. That's. I could see like that being a great little angle. Now maybe it could be the same thing with the Corvette, but because the Subaru's half the price, you get the same, you know, bonus depreciation here. This first year depreciation. It, you know, there's a lot of other value there you're gonna have to add in to say, does this help my brand or is this otherwise just something I love? And I'm, you know, you're spending more for that. I guess what we're saying, not enough tax bang.

Yep. Okay, now let's go to. It is time. Ding Ding, ding, ding, ding, ding. For the rapid fire time, we're going to try to rapid fire some answers here quickly. We got a bunch of questions, so, James, you throw them quick. Matt, you are allowed only one sentence to answer that question, and the same rules apply to me.

Okay, I'm going to raise one objection here to this. I'm okay with the rapid fire, but let me just say Mark and I were both tax lawyers for years, doing consults all day long. Let me just say I learned how to make something that takes a minute take an hour, because that's how you build time. I'm just tasting. Of course not, but.

All right.

Okay, James, you hit us this question.

Question is from Toro. Tommy Guns 45. Is there a limit on how many vehicles we can write off? Say I buy five Teslas for Turo Rideshare.

Okay, Matt, is this one yours or mine?

I mean, you can take it.

Okay, Tommy gun 45. Love your handle. This is not part of my answer. Okay, you can write off as many vehicles in your business as you want and that are used for the business purpose that you have created. You're good to go, period. One sentence.

Boom.

Yeah, yeah, you think like UPS and FedEx. I mean, you know, they don't. They get right off more than one truck, right? They're writing off all those trucks. So the bigger your business and vehicles, bigger bang for your buck on the write off.

Okay, next we got Merrill Tirado. Can we write off all miles every time we visit the state where our rental property out of state is, no matter how many miles, how many times?

Math.

Yes.

As long as you have a business purpose for going there. Like, what is your purpose for going there? Like, are you checking on it? Are you showing a tenant? Are you making improvements? Is there repairs? So there's going to be unreasonableness if you're, like, just driving by, making sure the grass is cut and you wrote off 2,000 miles or whatever there and back, or I, you know, I don't know. It's probably not that far, but you know what I mean. So, yes, as long as there was an actual business purpose for your travel,

to get there right off as many times and as many miles as you need to take care of your rental, I don't care if you're going from New Jersey to Albuquerque, New Mexico. Little shout out to Breaking Bad. Okay, go ahead, James.

We got Chicago pinup. She says, what are acceptable uses? And I'm assuming business use.

Okay, my turn versus private acceptable uses. Pin up, Chicago. We'll leave it There we've got acceptable uses for the vehicle. Running errands to pick up supplies, check on properties, meet with customers, meet with affiliates, meet with employees, pick up lunch, pick up equipment, visit another business location.

Am I missing like go to a networking event or a business conference or training?

Love it.

Mark J. Kohler Workshop, Real Estate Tax Summit, you know. Yeah, self directed IRA summit.

All those are good business purposes. Commuting to your day job, back and forth. Not a write off. Going to the movie theater, not a write. Off. Going to the grocery store, not a write off. Going to a baseball game to meet with a customer and go to a game. Write off. Going to the movie theater with your employee. Right off. Okay, we're good. All right, James, next question.

All right. Car registrations and insurance costs by Tom Penney.

Matt.

Okay, so you don't have to have the car registered in the business name for tax purposes. Now you may want to do this for those of you, maybe you're a contractor or you're got a.

This is rapid fire bud. And I'm trying to work on the cinnamon roll. So work it quote quick.

I'm going, I'm going. I'm getting there. I gotta say. So for tax purposes, don't worry about where you're registering for asset protection. I might want it moved to put in your entity name if there's some liability other people driving around. So for registration purposes can be in your personal name. Let your insurance agent know though that this is used for business use. The insurance agent needs to know so that you have the right insurance coverage. Insurance coverage for personal versus business is going to be different. So check with your insurance agent, make sure you got coverage for business use.

Okay, one sentence answer here too. I would say if you're asking if registration fees are a write off or the insurance premiums are a write off, they are only a write off if you're using the actual method. With depreciation, if you choose the mileage method, the mileage captures those write off and you don't get to write them off on top of the mileage. So it's either mileage or actual.

Okay, James, we bought a fifth. This is Jonathan Jobin, Jubin Jobin. We bought a fifth wheel to live on site through the week, the work week at a new commercial property where we purchased. We are doing a lot of work on site to get a couple of businesses started. Business expense question mark.

Okay, well I'm just tell you right now, I'm yes, some of you that are worried about my health, this is Low fat eggnog that I'm chasing down that cinnamon roll with. But It's December and January 1st is just around the corner. I'm going to take care of this problem then.

Yeah, I am concerned. So that's like. I don't want my business partner to fall over, dad. But you live though. Just live.

Okay.

All right, now everybody out there, I love this write off. If you have an rv, a mobile home, single, wide, double wide, whatever, and you're putting it at a work site during valid improvements during that time period while you're improving the property, it's 100% write off. If you pick it up and go to the mountains or the lake, then you have to start counting use days personal versus business and go to a percentage write off. But as long as you're using that fifth wheel for business purposes to park and work out of as a mobile office and tool shed while you're improving a residential or commercial property or whatever the hell you're doing.

Love it.

Total write off. Talk to your accountant. James.

Yeah, this is kind of a funny 1. Dog walker 6 9. Can I write off my subwoofers if I use my sound system on the contr construction site for the crew?

Absolutely. This is not an auto, but absolutely. I mean that's equipment used in the business. That's going to be a write off.

I'm assuming the subwoofers are in the auto itself.

Well, but that's not about transportation. It's being used to entertain and you know, it's being used at the work site.

Okay, I'm going to be technical here. As an accountant, if those subwoofers are attached to the vehicle, then you're going to need to go with the actual method. So if you're doing mileage and you attach new stereo, a broken muffler that sounds way too loud. I've noticed a lot of broken mufflers lately. I need to go. I'm going to set up a non profit for young men that have broken broken mufflers. I don't think they realize how bad it is.

They need help. They need help.

So now if any of you want to attach something to your car, if you're doing the mileage method, there's no write off. But if those subwoofers can be popped out easily put on the work site for your employees, I'm writing off those woofers and I would include a drone because you need to be able to look above your project.

Bluetooth accessories, cord, cameras on the job site. I mean a Lot of that stuff that people are using. Absolutely. You see writing all that stuff off.

In fact, I'm gonna give you a legal tip here, everybody. A lot of clients that are doing rehabs, you can go to Cabela's or Bass Pro Shops and get those game cameras where if there's movement on a camera, it records. I use them personally to look for Bigfoot. But if you want to get one of those cameras and install them at your work sites. So when you're not there, if there's movement at your site, cameras catching them, they can be very indiscreet. It can protect you quite a bit. I believe in the movie the accountant, Ben Affleck also had some cameras in his backyard. And I thought that was a really good move. And as an accountant, I connect with Ben Affleck in that movie. And I've got secret cams everywhere.

Are too.

I just want to.

Yeah, yeah, yeah. Ben Affleck, the accountant. The accountant, slash trained killer. You know?

Well, you know, we wear multiple hats. We have to. Yeah, he's got a.

He's got a license to do some accounting and a license to kill.

So.

Real accountant.

All right, what do we got, James?

We got Michelle Grace Hoddle. I'm an architect. Is it better to lease or buy an SUV or a truck for my business? I primarily drive to meetings and job sites. But I am getting more into the construction side of things, including my own home office that I am building as an adu. So is the truck the better way to go, question mark?

Well, I got some thoughts on this map.

Yeah, go for it.

Is that right? Okay, this is one of my seven now. Everybody disregard. Michelle, bless your heart. You were saying? We're doing this business and adus and all that. I love it. That's great. But the real key word in Michelle's question was should I lease or buy? Okay. She also threw out suv. So here's there's two issues. Lease or buy. Big truck, little Subaru. If you're going to go with the bigger truck or SUV because you need that space, that's a good economic decision. You're going to get a bigger write off. Cool. If you lease versus buy, the lease payment write off is fantastic. And you get the lease payment plus fuel, repairs and maintenance. I hope you don't have maintenance with the lease. That's a crappy lease. But if you've got a lease, that's great. Write off. The only problem is mileage limits. Be very, very careful with those mileage limits because a lease can bite you. Bite you in the butt on the way out. So most of my clients that are doing a lot of real estate, they're on the road, they're racking up miles. If you know you're going to put it in over 12,000 to 15,000 miles, stay away from the lease. Just buy. Get the bonus depreciation, go for it. That's my thought. Matt.

Yeah, I like the lease. If you're. Maybe it's a second car for you. You have another car that you drive a lot. And maybe this is like, now I need a little nicer car to roll up at again for my brand. Or maybe you're going to sites where you want to look a little more professional. But you got your kind of day car. But that works nice because you can have 100% business use of that. You're writing off the lease payments and everything. You're not hitting the mileage limits. So sometimes if it's a second car for you, it could be a great option. But remember, with the thing about for mileage, you know, if you're doing driving 20,000 miles a year and you're getting 62 cents a mile, I mean, that's 12,000 bucks in mileage reimbursement. That's got to be over $1,000 a month lease payment. So if you're a high mileage person, don't do the lease. Look at the numbers. But I like the lease. Lower use. Also for the people that do it as a second car where it's 100% business use.

Love it. Just taking a moment here to sharpen my snowshoes. I've got enough grip when I'm out there walking the dogs in the deep snow here. I will say this again, folks, if you're enjoying this, if this is the most fun you've had, learning tax strategies. Freaking share. Subscribe like. We need you. We love you. We're trying to change the world one tax return at a time. We need you. Get out there, Give us some love. We appreciate it. Okay, James, next question. I'm going to finish this last spike on my snowshoes here.

Awesome. We've got Peter Y. I purchased a vehicle two years ago. I got bonus depreciation. When can I purchase another vehicle to take advantage of bonus depreciation again?

All right, well, Peter. Peter, right?

Yeah.

This is a hard one. Okay, everybody. See, with every good thing, sometimes there's a bad thing. You know, there's yin and yang. There's good and bad. Happiness, sadness.

Is this the lump of coal? What is this? What Are you about to serve up?

Should I serve up some naughty here? Okay, I'm going to be naughty here. I'm going to serve up some. This is. Peter's not going to like this. So here's the thing everybody. When you go and depreciate the crap out of that SUV or truck, so let's say that's when you go to sell it. You have to recapture the depreciation that you took over the sales price of when you sold it. So let's say. Okay, let me give an example everybody. So let's say I buy a used truck, 40 grand, you're very careful, you went out, bought a used truck, 40k, used it, and you depreciated the hell out of it. You wrote off all 40 grand. It was 100 business use. Let's say I'm being naughty. So I can swear.

I can swear this is naughty Mark. So that's okay.

It's naughty mark. Yep. Okay, so you wrote off the whole freaking $40,000 truck. Two years later you go to sell the truck for 20. So you sell it for 20 grand. Well, you've got to recapture depreciation and your basis is zero because you've written off the whole darn thing. So when you sell it for 20, you have to recapture that depreciation because you didn't use it up yet, you hadn't used the useful life of the car yet, you got accelerated depreciation even though you haven't used the truck to drove it into the ground. You didn't drive it into the ground in zero, you sold it for 20. So it says, Whoa, you depreciated that 20. We want that 20 back. Now that's not a bad thing. You got an interest free loan from the IRS for two years. I'd rather get a write off for 20 grand this year and give it back two years from now. I have no problem with that. That's a good thing.

Let me just interject with some of you don't know what the heck recapture means. That means you now have 20,000 of income. This is coming back in as income to you. So we gave you 40,000 of expense. Really only use 20,000 of expense because you ended up selling it and making 20 back. So the 20 when you basically sold it or traded it in, even when you say recapture, that's income taxable.

Yeah, remember Matt said that I'm the good cop, Matt's the bad cop. Okay, now here's the thing. Now let's say Peter says, well, I've had the Truck for two years. Business is good. I want to go out and buy a new truck. Cool. He's going to go out and buy one for 50 grand now. So the IRS used to let you do kind of a 1031 exchange where you could literally take the truck you sold now and roll it into the new truck. That's gone now. That was gone under the Tax Cuts and Jobs Act. So what you have to do is claim that $20,000 as recapture. Then you can go out and depreciate the new truck for 50. Now with that new depreciation of 50, 20 of it is going to offset the 20 here. So at the end of the day, you end up with $30,000 of write off. So if you go out and buy a new truck greater than the price of the one you sold, that's going to be a depreciation that you can take right now. But you're going to have to offset the recapture with the depreciation on the new one up to that amount. So it's not the end of the world. You know what I want to tell you? Go out and get yourself something real nice. That's what I'm thinking.

Yeah.

All right, James, what do you got?

All right, we got Ryan, Riggy Lee. What if I buy a car in my personal name but lease it to my business? That a write off?

Whoa, whoa, whoa, whoa.

That's a train wreck, not a write off. Yeah, yeah. Okay. Yeah, this is one we hear quite a bit. This is probably from a place similar to the one that says buy a business for personal use and put it in your. Or buy a vehicle for personal use and put it in your entity and now it's a write off.

No.

Okay.

When you lease something like equipment, like a vehicle, you pay sales tax and

you've got to claim the income on the other side. I'm right.

It's. It's a wash. You're just expense income. And what did I pick up in the process? It's the same income at the end that's taxable if I'm doing it to myself. And in most states I've just picked up sales tax which applies on. On leasing of equipment, so. Or personal property. Don't do it. No legit people person is doing that. That is not a legit strategy. Sometimes it sounds cool. Or somebody that thinks they can. They've like got some like novel ideas like, oh, we'll just lease it. No, don't do that.

Doesn't. Yeah, yeah. The answer.

You don't need to. If it's for business. It doesn't matter.

So don't worry. We gotta wait. We got an escape patch here for you. If you, any of you out there that have a side hustle and own a vehicle personally, you can still write it off. You don't need to have it in the business. You don't need to lease it to your business, you don't need to transfer it to your business. Just choose mileage actual.

That's it.

The IRS is cool with that. Just be able to show us that you use that vehicle for business and you're good. Don't do the leasing, don't need it.

All right, James, so this one is regarding, I'm assuming the LMS. Is there a list of CPAs or firms that have gone through the certification course previously mentioned by another question mark? If so, how can someone access this list?

Okay, we call it LMS meaning Learning Management System or software. So we have been building for the last year 80 videos in 12 modules. I've been behind the camera here with this background in December wrapping up some last videos. I've been in the studio all year. We've got exams, white paper, everything on it. Then the weekly trainings to supplement it. So any of you out that are a tax advisor, get over to markjkohler.com and let's get you registered. Get you some leads, get you some resources, get you a community, get you a tribe is very, very affordable and I'm discounting it by 2,500 bucks between now and January 1st. Price goes up January 1st. So if you want to get in on the front of it, this is the Pre launch pricing MarkJ Kohler.com now for any of you that need an accountant out there, there the new certified people have not come off the shelf yet. They are. I'm training them come January 1st. I know I'm going to have people ready to go by February. If any of you are looking for an accountant, be patient, keep following. Sign up for our newsletter at our law firm site. Sign up for the newsletter on my site, Matt's site. When those new accountants are certified and ready to go, you're going to get a ping. So you'll go to markjkohler.com and there's already a paint a part for it. It's called this MJK Certified Tax Pro Network. You put in your name and say as soon as there's someone certified I want a ping. We are capturing your info. We will send it to you. I don't make any money off of those Accountants. I just want to certify them and get them out there to the world. The law firm will be a support to them. Our directed IRA company will be a support to them. Our Main street company doing company maintenance will be a support.

Support.

We're not going anywhere. We'll be in the background helping those certified advisors help you. So just come look at my site in February, sign up for my newsletter and we'll take care of you people. It's going to rock. And these accounts are going to be all over the country. So next question.

Excited? I love it.

Is it gonna be sweet?

I'm excited for it. Right on.

So this one isn't auto, but I think it's interesting.

Okay.

And I think it needs to be answered from, from, from kj. Question.

Yes. As you buy eggnog in the holidays for your board meeting, this eggnog right here, this is a write off people.

Yeah. 100% for 20, 22. You know, if it's for entertainment, you know the little mills and entertainment going 50% next year. Keep that in mind.

Yeah. James, that was a great question. Eggnog is a write off. Okay, next question.

When we buy a piece of from kj. When we buy a piece of property and as we build our home, I'm assuming the home on this property. Okay. And starting a business within the house. Okay, There we go. Is that a write off? Question mark? Question mark, Question mark. All caps.

You want to take them out or I can.

It's.

Well, are you living in the home? If so, no, it's not a write off. You like you might have a home office deduction coming down the pipe. But if you're living in this. No. Now if this is a just a business location. Absolutely. This is the warehouse, the retail store, the office for the business. Great. But it sounds. When you say home, I presume you're living in it and having a home office. So home office deduction is likely your best route.

Yeah. And I would say this anyone. If you really want to create a. If you're building a place and you really want to create and carve out a better write off for yourself, home office is your fallback. You'll always get the home office. If you have an office in your home, whether you build it new, buy used, whatever. But if you can build a separate structure, a casita, a separate entrance, you want to really carve out a space on that property.

I have a lot of you adu popular accessory dwelling unit.

Yeah. The accessory dwelling ad use in California are a big deal. They're, they're catching on everywhere. And I have a lot of clients that do a little hair salon. They build on that to their home and that creates a really, a bigger write off than just home office. So I, here's what I do. Matt and I are a big believer in this. Everybody okay, you want another investment? Wealth building legal strategy Tip. If you need commercial space, build your own home. Have a home office. That's cool. But never rent from someone else. Your best real estate investment is always your first property to rent to your business. So if you can get into a strip mall, a condominium space and a bigger building, even a standalone facility, a warehouse that has storage, I, when I a business owner catches on, why in the hell am I paying rent to someone else or trying to squeeze into my home with all this material and garage space and basement and go out and shop for commercial property, put it in an LLC and rent it back to yourself in your business. Now that's a write off. I don't want you to rent your car back to yourself, but I want you to rent that building to yourself. Maybe you can create some additional units for some other rental income. Matt's done this. Yeah. Matt, any thoughts?

Yeah, I mean Mark and I have done this on a couple properties. We have businesses where we're the landlord owning the property, getting the appreciation, getting the cash flow. We're also the tenant paying the rent, which we are going to be regardless. We're going to be the tenant. We need the office space.

We need the.

You know, why don't we just be the landlord too? So that's the game.

Love it. All right, maybe two or three more questions please everyone, if you're loving this, give us a like a share, a five star, whatever. Oh, and I should said this at the beginning. Darn it, James, remind me constantly people avoid all that Facebook crap and, and the bots talking about some bitcoin crap. I do not comment during my own lives. And anybody out there trying to get you to click on something for some bitcoin crap, it's. It's a bot. Avoid it. I think most of you are smart enough to avoid those. Please do.

Okay, James, we got Adam Johnson. We bought a bumper pool trailer this year which we rent out in our area. How does RV apply? And good question would probably be do they use it as personal use also?

Well, here's the thing. We love Turo. If any of you haven't checked out Turo, it's pretty cool.

And that's allow rentals of our bumper Pool trailers on Turo, do they?

Oh, I don't know. I'm just saying in general. Here, let me bring it around. Yeah, there's. So first, Turo is awesome. If any of you haven't seen it, Turo is where you can rent vehicles from other people. It's like the Airbnb of vehicles. You buy a vehicle, you can rent it to someone else. On Turo, that's a business vehicle that you're going to be riding off. You might use it for personal and then write off the business use percentage. Well, the same thing applies to the RVs. There's RV rental pools out there where you can take your RV and put it in a pool and it's rented when you're not using it. I love that. It's the same concept as Turo, where if you rent it. Now, what the IRS does is it looks at your available rental days for the year. So if you put it in a rental pool for the whole year, then if it's available throughout the year to rent, then that you've got a denominator of 365 days. Then if you use it just 30 days yourself, then that's 10% business as 10% personal use. So what you do is your denominator is it's available for rent throughout the year. Then you say, what are my personal use days? You may say there's zero. Well, then it's 100% RV, write off everything, depreciation, the whole nine yards. But if you have any personal use days, that's the numerator. And you divide it by 5, 10, whatever, divided by 365, and then that's your personal use percentage. Then everything else you can write off. Good to go pretty straight. Next questions for Matt. You had no comment on that one. That's good.

Yeah, I was. I mean, you know, we're in the rapid fire round, so I'm trying to, you know.

Oh, now you're in the rapid fire mountain. Okay. Unbelievable. I need a swig. Eggnog. That was a little too much.

Well, first you got a. A bunch of thank yous for all of your answered questions.

Oh, thank you.

This one is.

Thank you everybody for being here.

Can we move on to the next questions?

Yeah, yeah, we're ready.

It's almost along the same lines. Working my Amazon business from an RV while traveling and making some stops for business purposes. How much?

Oh, if you could only wish it. So.

Yeah, like. Okay, just like. I mean, I don't even know if you can do a home office from an rv. Do you live in this thing? Like what is this? You're driving around in an RV making some business stops. Okay, you got some business use there, but the Amazon store, I guess I don't know what the question is. You could have some mileage.

Let me hit it. Matt and I speak at the rv. I love my RV crowd and that's one of you and I love you. Make sure you're on our next call with the R.R.V. inspectors. The R.V. repairs or work camper. I'll take care of Steven Coop. We love those guys. If many of you didn't know, there is a full on other community out there of people living in their RVs full time or hitting the road for months on end in their RVs. Once an RV is your primary residence, there's no the only thing you can take is mileage to get to any new business location. That's it. If the RV is your primary residence, you're going full time RV and you know who you are. Mileage to the next business location, that's all you get. You don't get home office, you don't get that. But you know what? You saved sticks and bricks. You're not paying for a fricking house anymore. And utilities and property taxes. You went on the road, you became a gypsy. That's cool, enjoy the ride. But you're not riding off the frickin rv. Now for some of you that say, well Mark, I kept my sticks and bricks, that's relating to the three little pigs. If you need to, I can go through that. But if you keep your sticks and bricks and then drive an RV for business, to go to a business location and do inspections, repairs, work somewhere to work on rentals, whatever, then that RV can be 100% write off because it's now a business vehicle. It's a business trailer that's going from your home to a business location. But I hear this all the time, Mark. Oh, I'm writing a book and when I'm in a chalet in France I really feel it and I'm in my zone and I can really write. I need to write off that rental in France because I'm on location working on my book and that ain't happening. I don't care if you're feeling the love right enough, you know, riding in your rv, working on your Amazon affiliate business or whatever you're doing on Amazon just because you're in the RV working on Amazon, not a write off. Just because you're in that cabin in the woods working on your book doesn't make the cabin a write off. You have to have a business meeting, a business purpose, a business thing. Because if I can write my book or work on Amazon at home in my garage then the RV ain't a write off. So people think about it's not. You got to have a purpose of a relationship, a meeting, a project, hands on something. Just work on your Amazon. Online business in your RV does not make the RV right off.

Next question, next question. Okay, so this one is not auto but this is from one of our regulars, West Coast Longi 85 hello, Aloha from Hawaii. I have an Amazon business and was wondering can I write off all the inventory I purchased in 2022 but only sold 75% of it? Heard you can write it all off. Mahalo.

Well I Doesn't this have to do with like the accounting method they're using A cruel or inventory becomes tricky.

The general rule is no, you don't get a write off for inventory. You haven't sold that. Most inventory based businesses are required to go onto the accrual method. So what you do is you look at your inventory at the beginning of the year. Whatever that balance was, maybe it was zero. You bought a bunch of stuff during the year and then you look at what's left on the shelf at the end of the year. This is why many of you right now during this week you if you go hang out at any retail store in the middle of the night right now shopping at last minute, you're going to see people going around doing little counters and they're counting inventory on the shelves so they can figure out what inventory wasn't sold before year end. So you have your beginning inventory and your ending inventory and then you take your purchases and you subtract your purchases in that mix of beginning and ending and it comes out with what you sold. Whatever's left on the shelf is not a write off. Now that's the general rule and I'm going to say and I know there's some accountants listening here. Well Mark, there's an exception for this and if it's under a certain dollar amount, if it's under that, I would say it's more of an exception to go on the cash basis and I would work very closely with your accountant and make sure that they sign your return and they stand behind the method they recommend and that you qualify to get out of accrual. So what you want to do is try to so if you've heard it's a write off that ain't good enough. Meet with your accountant. If you're looking for a certified tax advisor, come January, Feb, we'll have them ready for you. File an extension if you need to in April. It's no big deal. We'll get you an advisor in the spring. But you need to work with your account and look at the exceptions you might qualify for. All right. For fun. One last question, James.

Well, I was wondering if we can give some books away.

Oh, yeah, let's give away some Christmas presents. I know I'm getting ready to hit the slopes. And so.

There's a quick question from Merle.

Some nice goggles if you want to

go with this first. And it's a real simple question, so if you can just fire away on this one. Murrow, Toronto. Again, can we declare our gas receipt for travel, aside from mileage, to check on our out of state rental property?

No.

Yeah, mileage takes into account your gas. So you only track your receipts for gas or repairs, insurance. If you're doing actual. If you're tracking mileage, mileage takes into account gas. So you don't get to write off the mileage plus the gas. Now here's one for you though, that's important. Let's say you are traveling for business, but you get a rental car. Now, I want you to track that gas receipt that you use to fill up the rental car. Obviously the cost of the rental car is a write off too, but. So that's a little one where maybe if you're used to doing mileage, you got to actually keep those gas receipts when you're getting the rental car.

I like it. Great comment, Matt. And that's if you're using Turo, a rental car agency, or you might be doing Uber. You know, Uber's 100% write off when you're out there on the road doing business too, to go visit grandma and have your board meeting. Huh?

Huh?

Some of you getting off the plane in the next four days and you're going to go visit Grandma. No, no, no, no. You're going to visit one of your board of directors and you're going to have a meeting with grandma. So your airfare and your Uber to go visit Grandma's a write off. Maybe even some food, take her out somewhere real nice. But that is a write off, people. Okay, James, give us three or four names, would you? Win the tax we're going to give away. Let's see, four of Matt's books and one of mine. Sounds like a good deal.

Yeah, that's definitely you're definitely in a giving mood. And given. I mean, here we go. Self directed IRA Handbook.

Okay, two of each. Two books of each. Let's do it. We can't hear you, James. We can't hear you, James.

My apologies. We're gonna have to do five because you said five.

Okay. All right.

They're gonna hold you to it the court. That's what they're gonna say. First one I want to give away is kj.

Okay.

All right. Our second book is gonna go out to Murrow Toronto.

Love it.

That third book's gonna go out to one casual one. Okay. The next one's gonna go out to Michelle Grace Hoddle. Okay. And the last one is going to go out to Riken Patel.

Okay, folks, if you got. If you want a book today, you need to email Diane. D I A N N E2N's dianearkjkohler.com Email Diane and say I want a book on the broadcast on the 22nd and I need my book please. And she will verify that your handle with James and get you that book. We'll sort those out between Matt's and mind Books and hook you up. I was hoping we get Chicago Pinup a book but you know, if we're. Apparently we're not giving any credit to Creative Handle so we'll just leave with that.

So. Well, we're definitely going to give Chicago Pin Up a book today. That to the list.

Six books. Oh, yeah.

Must be.

Must have heard that when they win. Because if you're gone.

Yeah.

All right, well, happy holidays, everybody. Thank you so much for being here. We're grateful to be a part of your lives. We love small business. Love the side hustle. Love the big business. Love to save taxes. Asset protection business. Self direct your IRAs and 401ks. Get one Wall street out of your life. Get Main street into your life. That's where the money's at. That's where wealth's really built. And that's when you take control of your own destiny. We're so grateful to be a part of it. Matt, any final words of wisdom and take us out.

I just can give you, you know, the last tip. Since it is, you know, that holiday season, I just wanted to leave this last tip. Remember, guys, the best way to spread Christmas cheer is singing loud for all to hear. So, you know, don't be shy, sing some. Get out there, sing the Christmas songs.

I don't think I've ever heard Matt sing. So I really app that tip. That's good.

Yeah, I'M gonna surprise you. I'm gonna surprise you.

Now James can throw down. Everybody. James has got a band. He's got his own production studio. This guy's legit. We ought to have him perform one of these days. Can you sing us a bar, James? Right now? Nothing.

A bar.

Are you singing at a bar this weekend or sing a bar for us?

Yeah, stay tuned. We'll have some jingles coming soon. All right.

Okay. Thanks, everybody. We'll see you next week for another live, right before the new year. See you.