Posts by Brandon Rogers41

Thomas Diaz8 said:A small business owner has leased a personal vehicle that is officially registered in his wife's name. I find myself wondering about the logistical implications here: is he required to maintain a meticulous mileage log? Furthermore, can the vehicle be used for personal errands, such as trips taken by his spouse? Specifically, regarding tax compliance, would he need to record a fringe benefit for personal use via payroll, or is simply applying a 30% reduction to the tax-deductible expenses sufficient?

He definitely needs to track the mileage, though everyone seems to think leasing a vehicle is a simple workaround.
If he wants to lease the car from his wife, he’ll need a formal lease agreement, head down to the IRS to pay the rental tax (for the wife), and only then can he claim 70% of the car expenses; for the remaining 30%, he'll be paying taxes on the reported income since it bumps up the taxable base. It works similarly for the lease amount itself, which is also only 70% deductible.
Honestly, if he's already stuck keeping a log, wouldn't it be smarter to just record everything and calculate the reimbursement $0.67 per mile whenever he has the cash flow?
As for his wife driving it, sure, why not? He's just leasing it from her, but the mileage log remains mandatory.

driftingmoose39 said:Hello,
I have a question regarding the annual income tax filing for self-employed freelancers. Does the total tax liability for 2016 get reduced by prepayments made specifically by December 31, 2016, or does it include all prepayments applicable to the 2016 tax year (including those paid in January or February of 2017)? My accountant insists that my obligation should be offset by all prepayments pertaining to 2016, but according to the IRS guidelines, it seems they only accounted for what was actually paid by December 31, 2016. As it stands, I'm looking at a significant balance due along with a mountain of interest penalties. Who is correct here? Is there a specific place where this rule is documented...
Thanks in advance for any help you can provide.

You should always just call the IRS and ask them exactly how much was credited on a specific date, because honestly, nobody truly knows how they run their math behind the scenes. It never seems to match what’s written in the manual. Usually, the instructions say everything paid by February 2nd counts if you don't have an outstanding balance, so following that is your safest bet—just make sure to stay on top of the FARC regulations regularly.

Henry Edwards33 said:Market value is pretty simple: it’s just the actual price someone is willing to pay to close the deal.
In this particular scenario, we’re looking at a higher book value.

Determining actual market value is a pipe dream. You can't just point to a number and call it reality; instead, you have to rely on an artificial valuation. At the end of the day, the only "real" value that matters is whatever gets stamped out in a formal report by a certified appraiser.

I get it all the time—these self-proclaimed "experts" constantly tossing around market value figures like they actually know what they're talking about (looking at you, Brandon Rogers41).🙄

Fair enough, market value doesn't really help anyone except maybe the IRS when they want to start an argument, but even if you sell something for less than its book value, that difference has to be recorded as receipts, since you can't depreciate more than what's legally allowed before writing it off as an expense.

Rachel Allen21 said:I have a quick question regarding the sale of long-term assets at a value below their book value. Here’s the situation: we're looking at an asset that's partially impaired—so the selling price, excluding sales tax, would be $667, while its current book value sits at $2167. I was wondering, do we need to account for sales tax on the difference of $1500 as well? If that's the case, what's the best way to handle it? Specifically, should this be recorded in the "other data for input tax adjustment" section of the sales tax return?

No, you don't. You just calculate it based on the actual sale amount, though you'll still need to report the full market value as revenue, regardless of the fact that you sold it for less.

Anthony Davis12 said:Hey everyone, I was hoping someone could lend me a hand with filling out my Form W-2... I handle my own bookkeeping since I run my own small business here in the States, but I’m having a bit of a hard time tracking down some specific info online...

Here’s the breakdown of my situation:
- all my expenses through my bank account from the start to the end of the fiscal year totaled $33333
- this includes one fuel receipt for $167 (where 30%, or $50, isn't deductible, leaving $117 as the deductible amount)
- it also includes a business trip categorized as a representation expense $267 (of which 70%, or $187, isn't deductible, so $80 is what counts)
- on January 1st, I recorded a personal vehicle valued at $6667, and by the end of the year, after 40% accelerated depreciation, it's at 8,000.00

So, my questions regarding the Form W-2 are:
- my cash expenses are sitting at 0.00
- for expenses paid via bank transfer—how much should I actually list there? $33333 or should it be less, after subtracting those non-deductible representation costs, which would come out to $33097
- for in-kind expenses—what goes in this section? Is it just the $6667 for the personal vehicle or something else?
- for write-off expenses—what am I supposed to enter here?
- for representation expenses—what should I put down for that?

You just pull everything directly from your KPI.
Since your total bank transfer expenses are $100,000.00, you'll subtract the entertainment amount you're putting in column 5; so, for column 2, you’d enter $99,200.00 (you're essentially breaking down the costs here to keep everything transparent).
In column 5, you'll list the total entertainment expense as $267
For column 4, you'll enter the total write-offs, which in your case is 8,000.00.
Then, in column 8, you put the non-deductible amount, which would be $237
As for non-cash expenses, you don't need to enter anything there. While those figures are in your KPI under depreciation, you actually record them in the write-off column here so the cost breakdown remains clear.