I was just thinking about this. Take Red Swift, they buy a truck, then after they use it for three to four years, they lease it off, for $375 a week (Pete) for a couple of years (2.5) with a $10,000 ballon payment. But is Red Swift paying the taxes on the profit they are making from the lease truck that they have already depreciated out?
Let's say they pay $88,000 for each truck (infact, that IS how much they are paying for the new Prostars, they left the billing invoice in one) They depreciate it out over three years (which I am to understand that you can do with a big truck, some people do five) then you turn around and lease it off for what will be $48,750 in payments, and a ballon of $10,000 for a grand total of $58,750. Now I'm not sure on the complete depreciation table, but if you sell something for more than what it is valued, don't you have to pay more taxes on the added value?
Because you know they took more than $28,000 in depreciation.
Should the IRS look into the lease to own programs?
Discussion in 'Ask An Owner Operator' started by Sad_Panda, Oct 9, 2009.
-
-
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.
-
what about the fake owner/operator status? I'm assuming that in a fleece option, the driver is working as an "independent contractor?" that is, the company pays no income tax, no social security tax, no unemployment insurance, no disability insurance? but yet, the driver is driving a COMPANY truck, getting loads from the same COMPANY, under direct COMPANY supervision. sounds to me like the fleece option victim is in fact an EMPLOYEE.
if and when it ends up going to court, the company is going to say "no, they're an independent contractor!" problem is, the judge isn't going to look at what they call it, but rather what the company is actually doing. and it sure looks like a fleece option victim exhibits all the symptoms of being an employee. hell, some companies try to pull the old 1099 scam who are not even trying to do the fleece option scam. would be an interesting case. -
This sounds like a case for OOIDA. I thought everyone cheated the IRS from time to time.
-
-
You work for the IRS?
-
Nothing the IRS could even if the wanted to during the lease if you paid too much thats your fault no different than what Rent To Own stores are doing or 19% credit cards companies are doing its up to the buyer to be aware of what they are buying tax value is completely different from retail value. I sold two dump trucks for $7500 which was considered cheap but as far as the tax office the tax value was $1500 on each one
simplyred1962 and Big John Thank this. -
What you're saying is correct, but it isn't addressing the fact that all lease purchase agreements and actually nearly all O/O lease agreements violate the standards and qualifications for a person to be considered an independent contractor and should and would consider all of the lease purchase and leased owner operators to be employees of the companies and make them liable for the taxes and witholding of all of them. If the qualifications to be considered an independent contractor were enforced by the IRS it would completely do away with lease purchase programs and take many thousands of the excess truck capacity off the road, ultimately strengthening the financial health of the entire industry.
-
So, is there a case on this pending?
-
The value of any truck that is sold is the amount that the buyer paid you for it. Not $1500. That is assuming you had depreciated it out 100%. For you to show a truck being sold for $3000 when you actually recieved & $7500 is incorrect unless you had depreciation in the amount of $6000 left in depreciation yet to be claimed on your income tax return.
Unless your not talking about federal income taxes in this qoute i might have another accountant review your tax return.
I have been looking for years for a way to keep equipment I sell that has been fully depreciated from rolling over 100% into my income.
The closest thing I can find is to buy something else and use advanced depreciation. Which keeps you buying more each year. Which of course is what it was meant to do.
Am I missing something? -
Last edited: Oct 22, 2009
359kool Thanks this.
Trucking Jobs in 30 seconds
Every month 400 people find a job with the help of TruckersReport.