Most of the questions are tax-related, and we can’t give official tax advice. But there are tax deductions for partial business-use vehicles, and most of them follow the same rules, which I’ll outline here.

The big rule is how much “business use” the vehicle will be subject to. And the threshold for most instances is a minimum of 50%.

This means the vehicle must be used for business at least half the time for it to be considered a partial business-use vehicle in most cases.  

So what is business use exactly? It’s when the vehicle is used for business purposes. In cases of pickup trucks and SUV’s, it’s pretty clear – jobsite use, hauling materials, going to and from jobs to quote, check on the crew’s progress, etc. However, it is NOT bringing your kids to Little League, even if your company did sponsor an outfield wall sign (and good for you in doing that!)  

It gets a little murkier when it comes to larger SUV’s and even passenger vehicles. The same 50% rule applies, but in many cases, business use is a little ambiguous. Is picking up business supplies as well as household groceries business use? That’s for the IRS to answer, not me. But I will say that’s probably not a fun conversation at the audit.

One thing that’s very clear though: a typical commute is NOT business use. Even if you own a company, the time commuting from your home to the physical office is not business use. 

Lastly, size does matter. Nearly all 50% partial business-use vehicles are eligible for some type of deduction, but the larger ones get the bigger deductions. 

Ok, that’s about it on the rules for partial business-use vehicles. I hope it helps, and that the biggest takeaway  is “ask your tax professional”. 

To first set the stage, I was recently discussing vehicle leasing and financing and similar, and what type of vehicles an equipment financing company finances. And “finances” is the optimal word when it comes to vehicles. These days, companies like mine sometimes shy away from outright leasing vehicles, preferring to finance them instead. Why is that? Because in a typical lease, the leasing company is listed as the registered owner. In a vehicle financing deal, the company that is purchasing the vehicle is listed as the registered owner. This is a big difference.

First of all, most companies actually want the vehicle in the company name. Taxes, assets, etc. It just works better for most companies that way. But the second reason we’d rather finance than lease vehicles is the liability factor, which brings me to the recent phone call.

We got a call from a sheriff in Virginia who was looking to collect on a parking ticket. Well, we’re not in Virginia, so at first, we were a little puzzled. Then it becomes clear that the parking violation was made by a client of ours, in a vehicle leased to them. Technically, we’re the “registered owners” of said vehicle. So when our client (mistakenly, of course) forgot to pay the parking ticket, we got the call. The happy end is things got straightened out, our client paid the ticket, and all was well. But it illustrates why an equipment financing company would rather not get involved in leasing vehicles (at least common leases. We do engage in TRAC leases [terminal rental adjustment clause], but discussing that is an entirely different post, or series even).

Hope you are all enjoying your summer.