Risky Business
It does appear that the original intent was to avoid paying higher commercial rates on insurance. If that is so, then I agree it's short-sighted and potentially devastating to one's finances.
Lying about the intended use of the vehicle will not usually come into play when the insurance company is asked to pay routine claims. However, when there's a huge claim with lots of money at stake, how many sleepless nights can one endure knowing that the insurance company can pull out the falsified application and use that as a valid excuse to refuse to pay?
The other question is whether commercial rates really are that much higher. Even when someone personally owns & insures a vehicle, most insurance companies require that the insured report their estimated miles driven in a year. If the vehicle is used extensively for business, then the higher reported mileage will drive up personal rates. Maybe not as much as commercial rates, but the gap is smaller.
On the tax side, the Sec 179 deduction is potentially a cash-flow trap, especially if the vehicle is financed. I think that question has been hashed over numerous times on other threads In any event, it appears to me that the client has a burning desire to buy a Hummer and is trying to get his tax preparer to validate the decision.
It does appear that the original intent was to avoid paying higher commercial rates on insurance. If that is so, then I agree it's short-sighted and potentially devastating to one's finances.
Lying about the intended use of the vehicle will not usually come into play when the insurance company is asked to pay routine claims. However, when there's a huge claim with lots of money at stake, how many sleepless nights can one endure knowing that the insurance company can pull out the falsified application and use that as a valid excuse to refuse to pay?
The other question is whether commercial rates really are that much higher. Even when someone personally owns & insures a vehicle, most insurance companies require that the insured report their estimated miles driven in a year. If the vehicle is used extensively for business, then the higher reported mileage will drive up personal rates. Maybe not as much as commercial rates, but the gap is smaller.
On the tax side, the Sec 179 deduction is potentially a cash-flow trap, especially if the vehicle is financed. I think that question has been hashed over numerous times on other threads In any event, it appears to me that the client has a burning desire to buy a Hummer and is trying to get his tax preparer to validate the decision.
Comment