How to??

[S T]

New client, claims vehicle expenses as outside sales form 2106.

Jan-Feb 05 has a F150 Ford that was placed in service 4/02. Claiming SMR.

March 05 traded in the F150 on a Nissan (Lease Vehicle). Received the payoff amount of $14,000 on the Ford. Had the Nissan from March 05 thru Sept 05, at which time Nissan bought back the Lease Vehicle due to "Lemon Law".

Then client purchased Dodge 9/25/05 and had thru end of 12/05.

Question, how and best way to report?

Business usage is approximately 70% on all, have documented milage logs. Only problem is that there is a period of about 20 days that mileage was recorded on a rental car while the Nissan was inoperable.

Thanks,

Sandy

[veritas]

Compute gain on sale of F150. You could use actual or mileage on leased vehicle. Use business percentage of rental vehicle expense. Use actual or mileage on Dodge.

[S T]

2nd vehicle buy out of lease

1st Vehicle, treat as a sale even though a trade in on lease? I guess maybe not like kind as 1st was "owned" and 2nd was "leased".

2nd vehicle: (Leased) If I use SMR on Lease Vehicle, then what about the the buy back under the Lemon Law on the Nissan (Leased Vehicle), client was mostly reimbursed for lease payments (7 of them), attorney's fees, less some miles for a total amount of $6,500.

The lease vehicle was for 7 months and turned back in under the "lemon law" and reimbursement received is what I don't know how to treat.

3rd Vehicle, set up as either actual or SMR, okay.

Thanks,

Sandy

[DTS]

???

The question about how to report the buy back of the lease has piqued my interest.

How would you report this and how does it come into play with the trade-in, if it does?

Dennis

[OldJack]

The question about how to report the buy back of the lease has piqued my interest.

How would you report this and how does it come into play with the trade-in, if it does?

Dennis

doesn't the leased vehicle payments @ 70% simply become a vehicle expense less an "inclusion" amount (see pub 463,page 23) less the reimbursement of payments from the lawsuit = vehicle expense for that vehicle.

I don't understand how it would have anything to do with the trade-in unless the lease was simply a financial lease and the intent was to purchase at the end of the lease for a small option price.

[S T]

Nissan Lease

Thanks Dennis and Old Jack for posting,

No trade in involved on the Nissan, Nissan is a lease. The vehicle due to manufacturer defects that could not be resolved, was bought back by Nissan under the California Lemon Law, so the client received approximately $6,500.

Concern, can the t/p still take the mileage (will use SMR for 7 months) as the vehicle is now gone, even though t/p received $6,500 cash back for all of his lease payments, DMV, repairs and attorney fees. T/P did incur the cost of gas, insurance, but that is all. So I can take the mileage rate mostly before 9/1/04 and then just show the $6500 offset to net out on the 2106, similar to an employer reimbursement that Jan points out in the following post.


Many thanks,

Sandy

[Jan]

lease car

Why couldn't you deduct the least car as you would normally do, either actual or SM, then add the $6500 to reimbursement not included on W-2 on your form 2106.

Jan