Lease Purchase (Tax) Question

A lot depends on how you structure your business, and make no mistake it will be a business. It usually is not just a matter of acquiring a truck, using the truck, raking in the money and paying the bills (including taxes) and stashing what's left over. That being said, most legitimate business expenses are deductible, so you do not pay taxes on that money.

So no, taxes are not calculated on a Gross Earning basis. If you are thinking about doing this, I suggest strongly you get some formal business and tax advice.

Best regards

 

Business operations such as this do not pay income tax to the government on the gross receipts.

They pay tax based on the net income of the operation.

In the case of the truck operation, there are costs that are there for the operation of the truck to achieve the gross income. You cannot make the income without repairs and fuel for instance.

 

Romans, taxes are calculated based on net income like Roadmedic said, and like dibstr said, it has a little bit to do with how you structure your business.

As a lease op, you can deduct your lease payments from your earnings, along with every other expense that goes into your truck (fuel, tags, insuance, etc.)

I'm actually keeping the books for a small trucking company right now, so if you have any further questions feel free to PM me.

 

There are several types of leases also.
If you are in one of the normal Rental leases, meaning that you will have a large balloon payment at the end of the lease, then all the lease payments are deductible.
If you are in a true lease to own, meaning that you will own the truck for like a dollar at the end, then you cannot deduct payments, you can only deduct depreciation.