Filthy lucre... (tax deductions).

[MechEDoc]

Let's say I bought a car on 12/31/22 that allows for a 100% bonus depreciation under section 179 (GVWR > 6,000 lbs), the vehicle is used exclusively for my 1099 work. On 1/1/24 I transfer the vehicle from my LLC to myself. Can I transfer the vehicle for a token amount (e.g. $1)? This would allow for avoiding depreciation recapture. Is this ok with the IRS? Additionally, my LLC and work are in a neighboring state without sales tax (where the vehicle was purchased and registered for work), but when I transfer it to home my state there will be a sales tax assesed. I am thinking that my state DMV won't accept a $1 valuation, but will assess taxes at the vehicles current value. However I would still stand to save on federal taxes (marginal rate 35%).

Is this correct?

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[cyanide12345678]

Let's say I bought a car on 12/31/22 that allows for a 100% bonus depreciation under section 179 (GVWR > 6,000 lbs), the vehicle is used exclusively for my 1099 work. On 1/1/24 I transfer the vehicle from my LLC to myself. Can I transfer the vehicle for a token amount (e.g. $1)? This would allow for avoiding depreciation recapture. Is this ok with the IRS? Additionally, my LLC and work are in a neighboring state without sales tax (where the vehicle was purchased and registered for work), but when I transfer it to home my state there will be a sales tax assesed. I am thinking that my state DMV won't accept a $1 valuation, but will assess taxes at the vehicles current value. However I would still stand to save on federal taxes (marginal rate 35%).

Is this correct?

Probably best to actually ask a real accountant.

Though the state will 100 percent charge you the tax based on the value.

Why not just keep things as is, keep the vehicle under the business and let it be?

 

[PianoMedic]

Talk to an accountant, I think the IRS would not accept this and/or penalize you for it. If you just bought it, you wouldn’t be able to say it is now essentially worthless. Or they would charge you based on the basis you had and the difference between that and $1. But seriously: talk to an accountant not the forum. Or a couple accountants.

 

[MechEDoc]

Why not just keep things as is, keep the vehicle under the business and let it be?

Because I want to get a car without paying as much in taxes...

 

[JacobMcCandles]

My uneducated guess based on common sense would be no but you should probably get an accountant to tell you no.

 

[NYEMMED]

You could… but if audited the IRS will want to see it sold to yourself at book value….

 

[EctopicFetus]

It is illegal. YOu have to pay FMV for it. Like I couldnt buy a house for $1m and sell it to someone for $1 and take a 999k+ loss. If you do the thing you are mentioning above and get audited you are screwed.