edatoakrun
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2017 USA tax complication and unfairness act, effects on BEV industry

Sun Dec 31, 2017 11:38 am

There was a lot of crap in the recent legislative monstrosity other than any changes in the FTC that will likely effect future BEV sales in the USA.

Top four on the list below, likely being the most important, IMO.

I do not have any particular expertise in the field, so please correct any mistakes I may make.

Top 10 tax changes for business owners

On Dec. 22, the Tax Cuts and Jobs Act (TCJA) was signed into law. This column briefly summarizes the most important of the many changes in the TCJA that will affect small and medium-size businesses and their owners. Here goes.

1. New flat 21% tax rate for corporations...

Profitable BEV manufactures (all but TSLA...no profits, no income tax) can either cut BEV prices or retain this windfall.

2. No more corporate alternative minimum tax...

See comment above...

3. New deduction for “pass-through” business income

...The deduction generally equals 20% of QBI, subject to restrictions that can apply at higher income levels. The QBI deduction is not allowed in calculating the noncorporate owner’s adjusted gross income (AGI), but it reduces taxable income. In effect, it is treated the same as an allowable itemized deduction...

It is widely believed that millions of employees will shift their status to contractors to walk through this massive loophole.

This in turn should open up a number of other company car benefits in the tax code.

4. Liberalized asset expensing and depreciation provisions

...More Generous Depreciation Deductions for Passenger Vehicles Used for Business: For new or used passenger vehicles that are placed in service after Dec. 31, 2017 and used over 50% for business, the maximum annual depreciation deductions allowed under the TCJA are as follows:

* $10,000 for Year 1.

* $16,000 for Year 2.

* $9,600 for Year 3.

* $5,760 for Year 4 and thereafter until the vehicle is fully depreciated.

Key point: For 2017, the old-law limits for passenger cars are $11,160 for Year 1 for a new car or $3,160 for a used car, $5,100 for Year 2, $3,050 for Year 3, and $1,875 for Year 4 and thereafter. Slightly higher limits apply to light trucks and light vans. So the new rules are much more beneficial...

Wow.

I would think this should benefit BEVS over ICEVs, as generally higher initial costs could be written off so much faster, while the higher fuel and maintenance costs of ICEVs will be still be incurred on the same schedule.

Expensive BEVs (other than Tesla X, and any other future heavyweight BEV which will also benefit from the Hummer loophole, excepted) should get the more significant sales boost.

Overall, it looks to me like an intentional effect effect of the tax bill was to favor the auto industry in general, and unintentionally (?) may favor BEV sales in particular.

https://www.marketwatch.com/story/top-1 ... 2017-12-29
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rmay635703
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Sun Dec 31, 2017 1:28 pm

Too bad I don’t run a small business anymore, could re arrange my finances and expenditures for a lower cost car.

Such is the silly world we live in

baustin
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Mon Jan 01, 2018 4:38 am

Employees cannot just change their status to Contractor. The IRS has many regulations and definitions to prevent employees from being classified as contractors. They have cracked down on this tactic, which was commonly attempted in the past to avoid paying benefits, overtime, and workmen's comp insurance, along with their share of Social Security and other taxes.
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SageBrush
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Mon Jan 01, 2018 8:07 am

Here is an expanded Q&A for the pass-through
https://www.forbes.com/sites/anthonynit ... caef8544fd

If the deduction has to be itemized, meaning that the standard deduction cannot be taken, it is difficult to guess how much, if any, of a final tax reduction eligible taxpayers will gain.

One thing is certain: taxes are more complicated now.

--
As for the car, I'll have to ask my CPA. In the past she has told me to pass on the idea even though the lion's share of my car use is driving to work. I think her judgement was based on workplace definitions.
I am the sole employee of my professional services small business registered as an LLC and taxed as an S-Corp
Last edited by SageBrush on Mon Jan 01, 2018 8:44 am, edited 1 time in total.
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smkettner
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Mon Jan 01, 2018 8:44 am

I thought all this was effective for 2018 taxes filed in 2019?
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DanCar
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Mon Jan 01, 2018 10:27 am

smkettner wrote:I thought all this was effective for 2018 taxes filed in 2019?
Yes.

baustin
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Tue Jan 02, 2018 4:47 am

SageBrush wrote:...
As for the car, I'll have to ask my CPA. In the past she has told me to pass on the idea even though the lion's share of my car use is driving to work. I think her judgement was based on workplace definitions.
I am the sole employee of my professional services small business registered as an LLC and taxed as an S-Corp


If you have one specific place you work out of, even in your situation, the daily drive can be considered commuting and difficult to justify a business expense for the vehicle. If you don't always work from the same location, have to regularly drive to client sites, or have other legitimate business use for a vehicle, then it is much easier to make a case for the expense of one. Then there are other issues to deal with, such as registering it in the business name and getting commercial insurance coverage. It is usually easier to track the business vs. personal mileage use and claim the expense that way.
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SageBrush
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Tue Jan 02, 2018 5:14 am

baustin wrote:
SageBrush wrote:...
As for the car, I'll have to ask my CPA. In the past she has told me to pass on the idea even though the lion's share of my car use is driving to work. I think her judgement was based on workplace definitions.
I am the sole employee of my professional services small business registered as an LLC and taxed as an S-Corp


If you have one specific place you work out of, even in your situation, the daily drive can be considered commuting and difficult to justify a business expense for the vehicle. If you don't always work from the same location, have to regularly drive to client sites, or have other legitimate business use for a vehicle, then it is much easier to make a case for the expense of one.


Yep, sounds familiar ;-)
This https://www.thebalance.com/can-i-deduct-commuting-expenses-397634 adds to your explanation.

Thanks for your post.
2013 LEAF 'S' Model with QC & rear-view camera
Bought off-lease Jan 2017 from N. California
Car is now enjoying an easy life in Colorado
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LTLFTcomposite
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Tue Jan 02, 2018 2:38 pm

Cutting the corporate tax rate hurts companies that aren't profitable because they don't benefit from the cuts.
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armmynissanleaf
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Re: 2017 USA tax complication and unfairness act, effects on BEV industry

Tue Jan 02, 2018 6:19 pm

But didn't the tax incentive stay? I think it did and it's a good news for EV industry. Am I missing something?
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