O/O no more

It depends on whether you bought it with a purchase contract or lease contract. I was told many years ago by an old hand that in the trucking business you lease to get in and lease to get out. I leased my current truck, which will be my last, and instead of depreciating it I write off the lease payment. The leasing company retains ownership of the truck and writes off the depreciation. Much tidier than a purchase.

 

if u sell the truck, you still owe taxes on capital gains. No?

 

No, if you have fully depreciated the assets (against income in previous years) say $100,000 worth. Then if you sell it for $25,000, then you must count that $25,000 as income in the year you sell it. This is called depreciation recapture. That income can be offset if you purchase another asset in the same year and start depreciating it. Think trade deal on a truck.

 

But you’re still paying taxes on the income, it’s just the new equipment off sets it. In the case being talked about the person is done with trucking therefore has nothing to offset it assuming s large loss for the year wasn’t had.

If you lease and write off the payments, but never end up owning the truck then yes nothing would be owed because you end up with no asset at the end. It’s essentially a fancy rental vs a lease to own.

 

All this stuff seems overly complicated to me.

 

This is where your accountant/bookkeeper comes in and earns his pay. I don’t know how many times this issue comes up in here.

 

Realistically, probably not often enough. Tax management is a very big part of running any buisness, not understanding it is a good way to go under, outsourcing it is fine, but a risk that the accountant doesnt understand industry specific tax options. This is how my brother ended up owing 20k on something that his biz partner burned him on. But his accountant showed him as owing on the billed amount, not revenue.

 

A good accountant is every bit as important as any employee you could have. Their knowledge can mean the difference between success and failure for any company. I paid cash for a new truck and reefer in 2018 and depreciated them both 100% over 3 years. At the end of the 3rd year, I sold the truck and trailer for about the same price I paid new for them, and my accountant was able to offset the profit of that sale with business deductions so that my tax liability was very small. I've used the same accountant for 25 years. I tend to overpay on taxes so there is never an issue. I've had two corporate IRS audits in the last 20 years, and they found no errors either time. On the contrary, both found that I overpaid my taxes. Good accountants aren't cheap, but they're worth every penny you pay them. Don't use a tax preparer for your taxes. Get a CPA that knows what he or she is doing. A healthy dose of fear of the tax man is much better for your business than doing things that call attention to your bookkeeping skills.

 

I’d be interested to see what sort of fancy footwork they did to find enough business deductions to make up for $200,000+ dollars unless it was from other entities you own. That’s great to hear though. No need to explain yourself further btw, I’m just surprised.

 

Overpaying your taxes does not strike me as your cpa is doing his job all that well, the scale of overpayment may play into it, 500$ a year, fine, call it protection from the irs, 2000$ + ... time to get someone competent