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I'm thinking of buying a new car and ponder the tax implications. I'm a real estate broker, owner of my own firm.

What steps do I need to take in order to make this a legit tax deduction? One idea was to print an ad on the side of the car to serve as a running advertisment.


I hope this wasn't from your tax advisor.

Do I have to use the car exclusively for business? Can I also use it for private trips?

You can use it for anything (legal) you like. Actually, the IRS doesn't care if you run drugs with it as long as you accurately report your income and expenses. Your business deduction will be limited by your business use.

(If I paint an ad on the side of the car, then one could argue that every trip whatsoever is work related since I'm actively advertising, right?)

Just like a Mary Kay saleswoman would be "advertising" while she grocery shopped because of her screaming pink & gray outfit? I think not. IIRC there have been court cases on point. Turning your vehicle into a billboard doesn't make personal use business use.

Would it be any different if I leased the car?

Hmmm. I'm really not sure about this. Nor am I sure about whether there's some level of business use that will allow special treatment, e.g. accelerated depreciation. I'd start with IRS Pub 463.

Phil
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