Mark Kohler helps a real estate professional in Utah decide between standard mileage and actual expense deductions for a truck. A $25k used truck with high miles favors the mileage method, while a $60k truck with lower miles favors actual expenses. Vehicle weight over 6,000 lbs and purchase price are key factors in the calculation.
Chapters
Okay, Tyler in Cedar City, Utah. That's our, we got our home office down there. So, Tyler, thanks for chiming in here. This is awesome. We got to go to our trifecta. So we go to our trust down here at the bottom. Tyler may have some rental properties that would be over on the side over here. He says he has an LLC for his real estate business. Now I did not take that as rental property the way Tyler posed that. So we're talking about this side of the equation operations. And I would presume if he's making more than 30 or 4 grand a year, he's going to probably do an S corp election on that. So if he has Tyler in the future, just say I have an S corp because that's what it is for tax purposes. I don't care if you have the LLC at the end of your business name. If you made an S election, whenever you talk to a tax or legal professional, tell them, I have an S corp for my operations. Oh yeah, but it's ABC llc. But it's an S corp. We need to know that. Now he says, I have a truck. That's an important tidbit. So this is a truck bed back here. This is my best effort of a truck bed. I've been thinking of the country song I Met All My Wives in a Pickup Truck and it's quite the good song if you're a country fan. Alright, now, in this truck, he said it's 90% business use. Now unless this is a little truck, I'm going to assume it weighs more than £6,000. Now this gets crazy because I'm going to go down two avenues. If I was doing a consult with Tyler, I was going to say, all right, how many miles are you putting on? How much did you pay for it? Is it used? And look at this dynamic. If it didn't cost them that much, let's say it's a 20 to $30,000 purchase. And so that, let's say cost is lower and it's not some tricked out F150 raptor for 60 grand or whatever, let's say he bought it used, being a little cautious and he's going to put on a ton of mileage. Now if he's in real estate, we know he's going to put on a bunch of miles. So let's think about this. Let's say my realtors are putting on 20,000 miles a year in their sleep. So that's a $10,000 write off or more every year. So if he bought the car for 25 grand within two years, we've written this bad boy off with mileage. And if it cost less than 30 grand, I'm probably going to go mileage, Tyler. Because it was a lower value, lots of mileage. Now let's say he goes, well, I don't put on a ton of miles and I bought this truck new for 60 grand. Ooh. So. Or whatever, I'm just going to say high price and lower miles. Now I'm going to probably be looking at actual rather than mileage. And see, this is the type of analysis you want to sit down and look at. And I've got a little grid again or little list of things in that blog article, Tyler. But this is what you do, people. Higher the cost, lower the miles. Actual lower the mile. The higher the miles, lower the cost mileage. That's the general rule. And then we kind of go from there and look at the income in your business. What are your plans, all those goodies.
