Topic: Jeep Build-up Expenses

[chrisfranklin]

Serious Jeep buildups are expensive  :o .  The fact that we do it over a number of years, because we tend to hold on to vehicles like these and their design is fairly constant and proven, makes the expense manageable.  Still, depreciation occurrs, but that doesn't really matter because this is something that you enjoy.  

However, as was said previously, Jeep buildups are expensive.
You can bet that any of the people operating aftermarket jeep/4wd shops across the nation likely deduct everything they put in their Jeeps/vehicles as legitimate business expenses.  So the money each puts in to new axles and ARBs and Beadlocks is from their gross income and is not taxed by Fed and State.  

I was wondering if any of you guys had ideas for businesses or partnerships that would serve as effective tax "shelters" for Jeep enthusiasts;  Ie., you get 20 guys to start up a service business partnership related to Jeeps, maybe trail guides or something; maybe have a CPA manage it all to keep it definitely above board, that kind of thing; any costs for the 10k a year you drop in mods are a write-off since they are effectively needed to conduct your business.  

 Any ideas for sole proprietors or just business ideas in general that could do the same trick for Jeep enthusiasts (and, I know some of you guys are going to be like, "this is a 4banger forum that we participate in for fun and where some of the members just got their driver's licenses...save this for a tax forum somewhere...")     But, I thought I'd give it a throw. :)

[jackhammer]

My friend and I have been snow plowing for 7 years. He started an official buisness and was able to write everything he did to his plow trucks off(I think his truck payments too). You can only claim losses for the first 5 years. After that the IRS considers your buisness a hobby(hahaha).  This may be an option for you considering what climat you live in.  I was never able to do this b/c it would f up my unemploymet for the winter months since I am a seasonal city worker for CDOT,  I am not going to risk 1900 a month over write offs.

[SMC4WD]

I spoke to a 4WD shop in Colorado about this.  I didn't get the full story, but I did find out that it is not as easy as you think.  I hope that someone who does have more knowledge than me pipes in here.

The jist of what I got was regarding taxes.  You have to sell a certain amount in order to write stuff off on your taxes.  If your running a million dollar a year company (which isn't that unheard of, at 100k a month), that doesn't mean you could write off a million dollars of stuff.  There's percentages (and I don't know them).

Things to 'work the system' legitimately would be in advertising.  If you own a 4WD shop, you need to promote the business.  The only way to do that is with advertising.  

Ok..   someone who does know what their talking about, pipe in here!

[Erik]

i wrote my JEEP off as a company vehicle when i bought it.  

everytime i replace anythign, it's written off as a repair or maintenance.

-Erik <-----  uses it to take clients on tours of property for sale... or so we say

[chrisfranklin]

Yeah, I mean, I'm just talking about staying "on top of" the personal cost of doing upgrades rather than being "underneath them," so to speak.  

With the cheap international exposure you get on the web with new service ventures these days, I'd say it's worthwhile to build a serious business, rather than just do some kind of "for-the-tax-write-off" thing (which seemed more popular to do in the low small-business-exposure, 70's and 80's, at least around the mid-Atlantic area).  

Any business major/MBAs on the forum want to do an analysis of how much in annual per owner upgrades would be enough $ to offset the personal time/learning curve/money investment involved with operating such a business, with it's corresponding "shelter" ability?  (You'd probably have to do $30,000 a year in upgrades to make it worthwhile  :) ...not that that's a bad thing).

Yeah, advertising and so forth is good.  But, one must investigate the federal and respective state's tax codes.  Frankly, you'll probably find you can get a handle on government codes pertaining to this type of subject matter better than your local tax advisor.   However, always good to have a tax advisor on the payroll in case of an audit.

[moerl8088]

well, I'm a business major in my sophmore year, but I can't say that would help me understand this proposition any further.  what helps more is that my dad is an accountant.  I really don't have anything intelligent to add, except for a humorous anecdote my dad showed me.
he knew a guy that ran his business and pretty much skimmed his wages off the top.  so over the course of his business' 10 year life it never once recorded a profit.  Ultimately the guy gets audited and when the auditor asks him why he continues to run a business that "on paper" is costing him money, his response was, "I guess I'm just bad at it."
I thought that was pretty funny.  but either way you look at it, if you are trying to write these expenses for your jeep off, you're probably going to be dancing on the line between tax shelter and tax fraud.  I really fail to see how forming a business of this nature could ever turn a profit or even break even with 10 or 20 guys each spending 10+grand a year and writing it off as a business expense.  SO given that, after 5 years of net losses the party is either over, or you go to jail.
also, I would definitly poo poo the idea of a sole propriatership based on the fact that that would pose a risk to your house or any other personal assets.  an LLC or LLP would be the way to go.
like I said, I'm definitly not an expert in this area, just plugging my opinion.  I'll have to show my dad this thread and see what he has to say about it.

[chrisfranklin]

I am merely asking members of this forum for business concepts which would require the buildup of one's jeep in order to do said business. Naturally, one doing such business would incorporate.

I am not talking some chickenshit 70s-80s era shelter.   Frankly, in this day and age, when it's ridiculously cheap for a small business to get national/international exposure on the web,  I find it repulsive that one would contemplate a small business as a mere shelter.  Conduct a 4x4 related business that serves a market, is easy to promote online, has next to zero overhead and also happens to require one to modify one's Jeep to do said business.  Incorporate; make corporate officers one or several or 20 or whatever.  

Frankly, it would be advisable to simply know the tax strategies of aggressve small business owners.  Then one can simply overlay Jeeps, Modifications, and so forth over that strategic "template" if you will.

And I need more than just, "well, you could do it" or "no, it wouldn't work" or "this is funny" or "you'll be in jail or yale" or whatever.  I am sure I and others are not the first to have considered a venture that would have the side benefit of making it less expensive for us to upgrade a Vehicle.