Extent of business use may determine whether an auto should be bought or leased

Article Abstract:

Changes wrought by the Tax Reform Act (TRA) of 1986 has effected the decision on whether to buy or lease an automobile due to the Act: lowering the maximum income tax rates; extending the write-off period from three to five years; eliminating the investment tax credit; phasing out the personal interest deductions; and implementing new restrictions on luxury cars. The interest-only auto loan, which was once very popular to finance auto purchases, is no longer appealing due to the lowering of marginal tax rates and the phasing out of the personal interest deduction. In most case, leasing an auto offers significantly more tax advantages than does purchasing an auto. However, taxpayers who change cars frequently should buy an auto and trade-in due to the lack of flexibility in long-term leases.

Lease or buy decisions

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Tax planning for short sale transactions

Article Abstract:

The Taxpayer Relief Act of 1997 has several provisions that have significantly minimized taxes imposed upon short sale transactions. Short sales refer to a practice wherein stocks or financial instruments are sold through a broker property that is not owned by the investor/seller. Under the law, short sale expenditures such as dividends and premiums are tax deductible. Nondeductible items include commissions, transfer taxes and investment expenses. On the other hand, Section 163(d)(1) provides that investment interests will only be tax deductible if it does not exceed net investment income. Dividend reimbursements for short sales are treated as either investment interests or as additions to the basis of the property used to close the short sale.

Tax Law, Public Finance Activities, Investors, Short selling

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Automobile expenses: new rules increase options for computing deductions and ITC

Article Abstract:

For the business use of automobile tax deduction, the taxpayer can use either the actual accounting method with 50 percent use or the mileage method during the first year. With the actual method further choices are available regarding investment credits. If business use is less than 50 percent, straight-line depreciation must be employed at a rate of 20 percent per year. In later years if the percentage of business use is the same and the mileage method was used the first year, it must be continued. If the actual method was used, it must be continued under certain circumstances, but a change to the mileage system may be made if straight-line depreciation was claimed initially. With increased or decreased business use, different rules apply.

Laws, regulations and rules, Business travel, Automobiles, Company, Company cars, Investment tax credit

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