CROW, SHIELDS & BAILEY, PC

VOLUME 1 ISSUE 3

Fall 2000

Making Your Business Really Fly-The First Step

Your Invitation to be a Part of one of the Best Business Films Ever made ...

No, we don't want you to be part of some new Hollywood epic. We simply want you to experience a film that will give you several things, including:
• New insights into your business
• The opportunity to marvel at the human spirit

The film's about an ordinary fellow who had an apparently ordinary business. Yet he was able to make it more than that-much more.

The film demonstrates how business people can run more profitable businesses. And even more importantly, it's a film about how we can have much more time for ourselves.

Are you a business owner who:
• has been in business for 3 years or longer?
• has a profitable business (but knows there is potential to make it more profitable)?
• is willing to listen to new (and maybe some "old") ideas?

Then don't miss an opportunity! This film could have a huge impact on your business and your life.

Showtime is at our office on Tuesday, October 10, 2000, at 9:00 A.M., complete with coffee, juice and doughnuts. Including breaks, the film takes about 2 hours and 15 minutes.

Space is limited, so please return the card you'll find on page 5 of this newsletter, along with your check for $50 to reserve your spot. Or, simply call us, or e-mail Deborah Martinsen to save a seat.

The big difference in the first year is due to a "Section 179" bonus allowed on the Suburban, a deduction not available to cars. You will eventually get to deduct all of your car's cost, but it will take much longer than the Suburban - your car won't be fully depreciated until the year 2017!

So Betty, there may definitely be a tax advantage to buying a bigger vehicle. But keep in mind that the Section 179 deduction is an aggregate amount applying to all asset purchases in a year. If you can't use it on your vehicle, you might use it on other assets.

Also, remember that leasing is a popular option these days. Generally, leasing a high priced car (not an SUV) for business use yields a higher tax deduction than does buying. But be careful, because there are many non-tax factors to consider when comparing a purchase to a lease. The accountants at CS&B have a program that will compare leasing to buying, and they can run it for you in a snap.

Dear Tax Man:
I spend a lot of time in my car selling real estate. Some of my friends tell me I can count my car as 100% business use, and I shouldn't worry about keeping records. My father says, "If you see it in CSB News, it's so. " Please tell me the truth, does the IRS require record keeping of mileage?
Signed - Virginia 0., New York

Virginia, your little friends are wrong. They have been affected by the skepticism of a skeptical age.

Yes, Virginia, there is an IRS. And yes, Virginia, the IRS does require you to keep records.

Adequate mileage records are considered kept if you record the date you start using your car for business, the mileage for each business use, and the total business miles for the year. It is not acceptable to subtract personal miles from total miles to compute business miles.

The more contemporaneous your records the better. It's best to keep a log in your car and make an entry every time you go somewhere for business. But let's face it-many folks just won't do that. But you should make an effort to keep some type of record, even if it's not quite that detailed. That's because if you're audited, the more detailed the records the better your chances are of keeping your deductions. The IRS will want something to verify business mileage, and if you haven't been keeping a log, you'll need to go through your appointment books and start reconstructing your business miles.

If you have an office at home, mileage from your home to a business appointment is business mileage. If your office is not at home, then generally mileage from home to the office or to the first business stop is considered "commuting" and not deductible.

In figuring how to compute your automobile deductions, you have a couple of choices - the standard business mileage method or the actual expense method. Using standard mileage, you simply multiply your business miles by the standard rate allowed by the IRS, which this year is 32.5 cents. This covers everything - therefore, you don't need to keep track of all your expenditures. Under the actual expense method, you do keep track of expenses including gas, oil, repairs, and insurance; multiply your business use percentage (business miles/total miles) times your expenses and that's your deduction. You can also take depreciation on the business portion of your car's cost, or the business portion of lease payments if you lease the car. But watch out - these calculations can be tricky depending on the type of vehicle you own.