Anyone here completed a lease with STEVENS?

I was wondering if some of you could tell me if leasing a truck and running your own business is any different than owning your own truck when filing your taxes or what the differences are. I'm not seeing the difference. I was reading Gonzo's post about the o/o and the deductions my ex-brother-in-law is an o/o and I know he had a good accountant that did just what Gonzo was talking about they went from $105,000 to $17,000. So I guess I was just thing a business is a business so would the same rules apply?

 

If you do your taxes properly and honestly,there is NO difference.
With a true lease (as opposed to a purchase lease), it is a bit easier, since you 'expense' the full payment.
In a purchase, you break out each payment and deduct the interest as an interest expense, and depreciate the rest of the payment.
you treat a lease-purchase as you would a payment to own.
For the average person, just writing down a lease payment and forgetting it is easier. However, the accounting types of this world don't care one way or another. They understand it and do it all for you.
As for other operational expenses such as phone, tools, fuel, maintenance, etc., it's treated all the same, no matter which way you go.
Now here is the basic difference between a purchae and a lease.
In a lease, you pay only the depreciation and the interest to finance that money. When the lease is over, you may or may not purchase that item for , "fair market value". That's the equity you never paid.
In a lease purchase agreement, you have a set price to buy the product at the lease end. As far as the government is concerned, that type of lease is a conditional sales contract. That's why it's treated the same as an equity purchase.
Now an equity purchase agreement (that's when you're buying it and making payments) has payments made up of interest, depreciation and equity.
Your payment is usually a bit higher, given the same period of time to finance because you are paying off that 'residual' balance. That is what is called equity.
Is that better?
It all depends.
Is that truck going to work for you when it's paid off?
Take the normal used truck purchase of new drivers.
It's usually 4-6 years old, has about 500,000 miles on it.
If you finance it for 5 years (as many do), you end up with a truck worth maybe $10,000. It's about 10 years old and has over a million miles on it.
Most first tier companies won't let you lease on with a truck that is 10 years old or with a million miles.
So what do you do?
Trade it in, sell it (good luck) or donate it to a chairity and take a write off.
Then start over.
In a lease, you have a newer truck, make payments and at the end walk away and get another 'newer' truck.
Both get you the same rateof pay from a company you lease onto.
A newer truck will likely have fewer repairs.
In a lease, you can trade out of the truck after 30 months and into another if you wish. So you're driving a newer truck, have no hassles getting rid of the older one.
There is an old saying in business, "You can't eat equity".
In other words, that extra money you pay each month to build equity just sits there. That is operational capital you could have financed receiveables with, paid other costs with.
Did you have to borrow money to pay those other items? Then your equity is costing you money.
If you are in the enviable position of cash rich, the a purchase may make more sense.
But if you're just starting out, often a lease makes more sense.
Now the caveat: Read the entire lease. Understand it. Ask questions.
No two are written the same and you can get burned in a lease if you don't know what to look for or don't understand the workings.
Hows that? Clear as mud?

 

Very good explanation...

Clear as Mississippi mud.

 

Thank you, yeah I kind of understand what your saiying, enough to know I was on the right track. Waht you were saying about what to do with the truck is exactly why I wouldn't be interested in owning one till I was ready to just go local or only go out enough to keep everything current. And even then chances are it wouldn't qualify with most companies. I've kicked this around quite a bit. Leasing just makes more sense for me and to me. What would you look for in the lease before you agreed to to it. I know most are two to four years long. I was just under the impression that most were cut and dried either you can live the figures and handle the payments or not. Are you talking about clauses or loopholes or what. I will admit I don't know anyone personally that has leased. It's been company and o/o. I will admit I did read the one post that you have to read the lease there and sign. I don't know if this is true or not , I kind of like to read something and think it over. I just like to go in with my eyes open, I guess you could say. II guess I would just like to have an idea of what a lease would say, or "along these lines". If something should be a deal maker or breaker. Anything you could tell me I would love to hear. thanks

 

Generally speaking you can lease one of two ways:
First is the independent lease. This is much like leasing a car. You pick out what you want from a dealer and lease it from companies such as GE, Ryder or one of many others out there.
You are completely responsible for that truck, it's maintenance, licensing...EVERYTHING.
No one holds your hand and reminds you the oil needs changing, the axles are due for a realignment or anything else. This is being an owner operator without the title.
If you know trucks and trucking, this can be best.
Points to look for: Who gets the depreciation for taxes, who gets the investment tax credit (if any), what are the exact parameters of the lease? such as mileage allowed, penalties for going over miles, what 'normal wear and tear' is.
Not a whole lot different than leasing a car, except a truck is subject to much more demanding environments and you need to have all things spelled out.
If you are leasing the truck for 5 years, allowed 150,000 miles per year, you will have as many as 750,000 miles on that vehicle when you turn it in. What is expected in the body shape, the interior, etc.
Quite different than turning in a sedan with 50,000 miles on it.
What is the disposal process? Do you simply turn it into the closest dealer, the selling dealer, or will you need to deliver it to their preset point? You could have to deliver it across the country at your expense.
Can you purchase it? Is it FMV price or is the price preset? (lease/purchase)
Second, and most common to people, is the 'lease from the company' lease. This is what Stevens and a myriad of other companies do.
They hold your hand, you learn and you pay a price for that.
For people that have never done large capital leases, I recommend this.
The second time around, you may choose the first option, but you will have a boatload of experience to draw from.
Most important point on a company lease is the 'escape' clause. If you decide leasing isn't for you, can you walk away with little to no penalty?
You have to have that to make it work. It protects you from your own naivete.

 

Thank you once again. I have been looking at stevens and millis because you can lease from them. I wouldn't be interested in the lease purchase. I like the idea of finishing the lease and getting a newer truck. I just wasn't sure about the deductions. england is the only one I've seen that has actualy shown you what you would would need to pay weekly. I wasn't sure if I called and asked if stevens or millis would tell me without talking serious with them. I don't know how to say this with out sounding stupid, but here goes anyway. I understand needing to have a maint. fund I would just rather do it myself. I didn't like the .07cpm for this and .03cpm for that and so on. I don't think I would feel comfortable with tying up most of my mony with the company. even if it was available or refundable if not all of it was needed. What I don't know is, is this standard practice or just an england way. I understand the need for the money being available when something does happen, I was just wondering how this works. I dont' mind paying for them to let me use thier truck, I just don't want to pay more than I should. And I realize sometimes its worth paying to have someone hold your hand. I've read TLea's postings with his run numbers I don't see anything wrong with the numbers. I just like info. I have a plan and just want to take the steps to get where I want to be. I just don't want to take a misstep if I can avoid it. thanks for letting me ramble. Have a good week

p.s. The escape clause- would stevens have one of these with doing the 60 day trial ? and can you ask for one to be put in a contract if it didn't have one, Thank you again

 

I think you will find any company that leases to you will require the escrow account. This is a way to insure the money is there and available.
If you don't use the money, it is refunded to you (at Stevens...can't say about anyone else). They do not require you to use their service facilities for work. you can go anywhere and in some cases they encourage you to use the 'deals' out there for things like oil changes.
You need the reserve. it really works better that way.

 

I can't say thank you enough. Like I said sorry if some of this sounds stupid. I've tried to just ask questions with out digressing, and getting off track. But in typing and deleting and trying again sometimes things just don't come out right. Thanks for your patience.

 

The escape clause is in Stevens lease...You set aside $500, into an escrow account, and if the lease option does not work for you, you may return to a company driver and there is no penalty. The $500 is returned, or used to fix the truck you turn in. If you walk away from stevens completely, they keep the $500.

The money set aside into the escrow account is yours. It does make it much easier to get preventive maintenance done, as I pull into a TA or Petro, they type in the truck number, and do the work. The cost of the work is deducted from my maintenance account on my next settlement. Any money left in the maintenance account at the end of the lease is yours, after Stevens inspects the truck and repairs/replaces what they feel it needs to be brought back to their standards.

 

Thank you, when I was reading about the the funding of the account I wasn't sure how easy it would be to access that money if needed or if there where any stipulations on where you would be able to get serviced. I do remember reading in one of your posts about doing maint. work but wasn't sure if it had to be an approved shop or what. The main thing I was concerned with was the access I would have to to money if I was out and needed something done. Thanks for the reply.