Registering Taycan in a LLC in USA

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Let us know if you find a reputable company. There used to be a few “automobile trusts” that you could join, but last I looked they were all forced to shut down. I considered jointly purchasing my car with a family member who lives in NJ which enjoys no sales tax on EVs and reasonable annual fees, or creating my own trust for this purpose. In the end, I decided to just bend over and take it. It impacts insurance and the ability to claim the $7500 credit.
Working with my tax accountant, it is looking like the pass through of the $7,500 credit from the LLC to my personal return can be accomplished?? As far as companies to set up the LLC and register the Taycan in Montana, take a look at these sites: https://www.montanacorporate.com/index.asp
https://www.49dollarmontanaregisteredagent.com/order/vehicle-llc
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I also think you're correct about the 179 assumption, but the problem is, they haven't change that tax code, so it remains SUV/TRUCK only. Which will be reliant on your VIN during registration to find out.

I'm also hoping the lifted options might be enough for Porsche to change the categorization. But I'm not sure if that means they have to re-test the cars under new category, which mean more $$, which might also mean Porsche will not want to, considering wagons don't seem to sell well (other than the performance ones we all love) here in the US.

I'm hoping once July comes around and we see some early deliveries, we can at least verify if CT is just a sedan over 6k GVWR or a cross-over.

My Model Xs are VINned as crossovers.

The standard non 179 option can still apply, and you can write off mileage as operation expenses. Which does work out pretty well. I had a Nissan Leaf that practically paid for itself, with the amount of mileage I drive for my business, I was getting about $12-$15k/year in mileage and operational expenses. Plus all my charging was free through Nissan or at client sites. So it literally cost me $0/year to use the Leaf for 4 years, and I gain tax benefits. Win-win.

So if you put a lot of mileage on the CT, we're talking about ¢0.55 per mile (I think) IRS allowance, and with EA free charging. You can still come out on top, albeit not all in 1-year like 179 can provide.



-ThinkMac-



Thanks for the input, I wondered about it as well, I actually am ordering a Cross Turismo and wondering if the VIN will recategorize it as a crossover due to its' lifted' status.

For example this CarPros article written in 2020 explicitly states 'SUVs and Crossovers' with a GVWR > 6000 can apply for the accelerated depreciation.

https://www.carprousa.com/2020-Tax-Code-179-For-Business-Owners-&-The-Self-Employed/a/1622

But either way, while the common understanding is the section 179 tax code is for trucks/SUV only, I think that is only because when it was written (pre BEV existing) that only vehicles typically categorized as trucks or SUVs could typically exceed this GVWR limit.
 

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You're 100% going to get audited if you buy the Taycan through an LLC out of state and still try to get the tax credit. 100%. The IRS does not like people using the sales tax loophole and you're trying to double dip by getting the tax credit, too (if it still exists by the time you get your car). It will not go well for you.

If you can't afford the sales tax, you can't afford the car.
 
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You're 100% going to get audited if you buy the Taycan through an LLC out of state and still try to get the tax credit. 100%. The IRS does not like people using the sales tax loophole and you're trying to double dip by getting the tax credit, too (if it still exists by the time you get your car). It will not go well for you.

If you can't afford the sales tax, you can't afford the car.
My intention of this post was merely to see what other members may be doing with registering their Taycans for business and tax purposes. Certainly not to advise committing any tax fraud.
I would be curious to know the facts on which you are basing your advise. Versus it just being your own opinion.
It goes without saying that I will rely on the trusted advise of qualified tax specialists . I am more comfortable with their advise, than that of some anonymous forum member.
At any rate, I appreciate your thoughts. And trust that other members will make their own decisions based on their own circumstances. And will seek advise from qualified tax specialists.
 
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Kayone73

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I also think you're correct about the 179 assumption, but the problem is, they haven't change that tax code, so it remains SUV/TRUCK only. Which will be reliant on your VIN during registration to find out.

I'm also hoping the lifted options might be enough for Porsche to change the categorization. But I'm not sure if that means they have to re-test the cars under new category, which mean more $$, which might also mean Porsche will not want to, considering wagons don't seem to sell well (other than the performance ones we all love) here in the US.

I'm hoping once July comes around and we see some early deliveries, we can at least verify if CT is just a sedan over 6k GVWR or a cross-over.

My Model Xs are VINned as crossovers.

The standard non 179 option can still apply, and you can write off mileage as operation expenses. Which does work out pretty well. I had a Nissan Leaf that practically paid for itself, with the amount of mileage I drive for my business, I was getting about $12-$15k/year in mileage and operational expenses. Plus all my charging was free through Nissan or at client sites. So it literally cost me $0/year to use the Leaf for 4 years, and I gain tax benefits. Win-win.

So if you put a lot of mileage on the CT, we're talking about ¢0.55 per mile (I think) IRS allowance, and with EA free charging. You can still come out on top, albeit not all in 1-year like 179 can provide.



-ThinkMac-
We'll see how things work out. I've been doing a bit more research on Section 179 vehicle deductions and best I can tell, the language of the tax code never really distinguishes between Trucks, SUV or crossovers when it comes to accelerated depreciation on a passenger vehicle (versus commercial vehicle) and the only clearly defined criteria is the GVWR > 6000 Lbs requirement.

Also more recent interpretations of the section 179 deductions say that the max passenger vehicle (over 6000 lbs) deduction is $25k and the remainder of the purchase price can be fully deducted as a bonus depreciation. This seemed to be current practice as of 2020 tax year.

Porsche Taycan Registering Taycan in a LLC in USA Screenshot_20210530-123946
 
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Kayone73

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Working with my tax accountant, it is looking like the pass through of the $7,500 credit from the LLC to my personal return can be accomplished?? As far as companies to set up the LLC and register the Taycan in Montana, take a look at these sites: https://www.montanacorporate.com/index.asp
https://www.49dollarmontanaregisteredagent.com/order/vehicle-llc
I was doing more business vehicle tax deduction research and think I found an answer to your question:

https://www.lewis-knopf.com/financi...usiness-vehicle-deductions-due-to-tax-reform/

This article was published in 2019 but I'll assume the part relating to claiming the Federal EV tax credit for a vehicle purchased thru a business entity still applies:

When a plug-in electric vehicle is used for both business and personal purposes, its credit is prorated based on the mileage for each usage. The personal portion of the credit is a nonrefundable personal credit that cannot be carried over. The business portion of the credit is also nonrefundable, but it is added to the general business credit and can be carried backward for one year and forward for 20 years or until the credit is used up, whichever occurs first.
So basically, depends on how much you report this car being used for business vs personal use, the amount of Federal EV tax credit you can claim on your personal tax return is proportional to the percentage amount of mileage you claim to use for personal use.

If you want to claim max business related tax deductions by purchasing the car thru an LLC, then you'll have to downplay the amount of personal mile usage you report and thus can only claim a smaller fraction of the Federal EV tax rebate towards your personal return,
 

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I also think you're correct about the 179 assumption, but the problem is, they haven't change that tax code, so it remains SUV/TRUCK only. Which will be reliant on your VIN during registration to find out.

I'm also hoping the lifted options might be enough for Porsche to change the categorization. But I'm not sure if that means they have to re-test the cars under new category, which mean more $$, which might also mean Porsche will not want to, considering wagons don't seem to sell well (other than the performance ones we all love) here in the US.
I was reading up on IRS Publication 946 for the 2020 tax year, and yes it does use the term Sport Utility Vehicles but it also defines any qualifying vehicle for the max Section 179 vehicle deduction ($26,200 for the 2021 tax year) as:

the vehicle must be a 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways, that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight.
Which the Cross Turismo definitely meets criteria. Whats encouraging is that lifted 'offroad cladded' vehicles like the Subaru Crosstrek and Outback (which are basically lifted cars) are indeed classed as SUV Crossover vehicles by the NHTSA so its encouraging that the Cross Turismo will receive a similar classification.

in fact it makes one wonder if Porsche chose to push the Cross Turismo first before a Sport Turismo partly because a large market like the US, there are better tax advantages for customers and thus better sales for Porsche vs a pure sport wagon.
 
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I was doing more business vehicle tax deduction research and think I found an answer to your question:

https://www.lewis-knopf.com/financi...usiness-vehicle-deductions-due-to-tax-reform/

This article was published in 2019 but I'll assume the part relating to claiming the Federal EV tax credit for a vehicle purchased thru a business entity still applies:



So basically, depends on how much you report this car being used for business vs personal use, the amount of Federal EV tax credit you can claim on your personal tax return is proportional to the percentage amount of mileage you claim to use for personal use.

If you want to claim max business related tax deductions by purchasing the car thru an LLC, then you'll have to downplay the amount of personal mile usage you report and thus can only claim a smaller fraction of the Federal EV tax rebate towards your personal return,
Interesting, & thanks for the info.. In my case the car will not be used for business at all. And the LLC that owns it will have no activity except owing the car & I will own the LLC. I will continue to have my tax people research the options.

This is what they are saying so far:

For federal and state income tax purposes, the LLC is a disregarded entity.


So for purposes of claiming the credit on his federal tax return, it would be as though he bought the car personally and not through an LLC

He would fill out the 1040 as though he had bought it personally

A single member LLC does not have to file any federal or state tax returns

There could be some issues with the car insurance, but that is not an income tax return issue"
 


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I was reading up on IRS Publication 946 for the 2020 tax year, and yes it does use the term Sport Utility Vehicles but it also defines any qualifying vehicle for the max Section 179 vehicle deduction ($26,200 for the 2021 tax year) as:



Which the Cross Turismo definitely meets criteria. Whats encouraging is that lifted 'offroad cladded' vehicles like the Subaru Crosstrek and Outback (which are basically lifted cars) are indeed classed as SUV Crossover vehicles by the NHTSA so its encouraging that the Cross Turismo will receive a similar classification.

in fact it makes one wonder if Porsche chose to push the Cross Turismo first before a Sport Turismo partly because a large market like the US, there are better tax advantages for customers and thus better sales for Porsche vs a pure sport wagon.
This is quite encouraging. I’m hoping my accountant feels the same FIRST THING TOMORROW! LOL
 

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I was reading up on IRS Publication 946 for the 2020 tax year, and yes it does use the term Sport Utility Vehicles
Ed - Looks to me that $25,900 will be the limit for the CT. This copied from Publication 946:


"Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $25,900 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2020. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,900 limit does not apply to any vehicle:

  • Designed to seat more than nine passengers behind the driver's seat;
  • Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible from the passenger compartment; or
  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield."
 

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Hello, long time lurker.

Just to get clarification--haven't had a chance to talk to my CPA

The 100% depreciation the first year putting a business car into service is no longer a thing (started 2020)?

Sounds like the "loop hole" is no longer a loop hole...
 

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Ed - Looks to me that $25,900 will be the limit for the CT. This copied from Publication 946:


"Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $25,900 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2020. This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, or highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $25,900 limit does not apply to any vehicle:

  • Designed to seat more than nine passengers behind the driver's seat;
  • Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible from the passenger compartment; or
  • That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver's seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield."
Good find, thank you. Everything in my research indicates that yes the max Sec 179 deduction for a passenger vehicle(GVWR > 6000 lbs) placed in service as of 2021 is now currently $25,000 max. However the REMAINDER of the purchase price of the vehicle can be written off as a BONUS DEPRECIATION in that 1st year as well, allowing, in theory to write off 100% of the purchase price of even a passenger vehicle that qualifies for the write off. So using this math:

Assume purchase price of Taycan CT= $125k for ease of math
Section 179 deduction = $25K
Bonus depreciation = $100K

If this deduction exceeds the business income reported for 2021, then the remainder deduction amount can be carried forward to 2022 business tax returns.

If this is possible then in theory, the owner of the vehicle doesnt need to concern himself with documenting business mileage or use of the vehicle after 2021, and can drive it however the hell he wants (personal vs business). However if he intends to sell the vehicle within the next 4-5 years, has to be aware of DEPRECIATION RECAPTURE, where the govt will want its share of sales tax if you sell the vehicle .

I have an appoint to go over this with my CPA before I purchase my car once it comes closer to delivery date, of course.

Hello, long time lurker.

Just to get clarification--haven't had a chance to talk to my CPA

The 100% depreciation the first year putting a business car into service is no longer a thing (started 2020)?

Sounds like the "loop hole" is no longer a loop hole...
The Section 179 'Hummer Tax' loophole as provided by the Trump Tax and Jobs act does have terms of expiration, and IIRC, this tax loophold is due to expire after 2022 I believe? But its something that should be looked up or confirmed with your CPA.

Also every year the max amount of Sec 179 deduction on passenger vehicles used for a business is decreased every year as well until it expires.
 

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However another potential wrench in this Sec 179 deduction plan (thanks to Klepper's post checking his VIN with the NHTSA website VIN decoder) that annoyingly Porsche has chosen to classify the Cross Turismo as a sedan, same as the regular Taycan, instead of a crossover MPV as many of us hoped.

Porsche Taycan Registering Taycan in a LLC in USA C89E6677-0D86-4844-AF06-5940AE55EF4A
Porsche Taycan Registering Taycan in a LLC in USA 31A5DEAD-22B9-46F4-8BAE-EED551F5E3B3


So now we're not sure if attempting to claim 100% accelerated deduction on the TCT will be rejected by the IRS versus doing a safer 5 year depreciation for the purchase price of the vehicle.
 

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I would love to recommend this thread to my buddy as they do want to start an LLC in the USA. I wonder if you all might be interested in to know about setting up a Delaware LLC and processing Delaware LLC Search to name a business so sharing it here. In my opinion, it is best to set up LLC in Delaware city.
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