Best approach to writing off RV for business

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tiffinboise

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We have a unique opportunity to buy a Tiffan Class A motorhome (2008) at wholesale, it books for $115K and we can buy for $66000.  That said we would like to buy this under our business because we legitamately use it for business but also pleasure but don't entertain in it.  They typical scenario would be that we would travel to Sun Valley or somewhere on a 4 day trip and since we have a mobile botox business (name includes Mobile Botox) Friday afternoon and Saturday morning my wife will have appointments where she provides medical esthetic services in the motorhome. Sometimes they use credit card, sometimes cash and the amount of patients treated varies.  The remainder of the time we are enjoying the city and staying in the motorhome instead of hotel.

So this would be bought and titled in the company name and we expect that we would keep it about 5 years before selling it.  We can keep any and all records needed but just want to be able to calculate our true tax savings as we do some cost analysis before we buy this.  The Mrs. is not totally on-board yet as we just sold our C Class and the costs were higher than anticipated (go figure)  So I guess the questions is in general how much of the $66K can we truly right off and calculate for our total cost of ownership over 5 years.  It will be worth $45k when we sell it in 5 years.  The accountant is out of town but we will eventually get his take as well.

Appreciate the help.
 
My guess is  50 percent. Pretty hard to convince tax people that you will never use it for personal use. You may be able to go higher, but possibly red flag yourself and open yourself up to an audit. Your accountant or tax professional is the one to ask for sure.
 
Great thanks, we certainly would be transparent about the mix use.  She may book appointments for Saturday morning in say Sun Valley, we drive there Friday night and come back Sunday.  Here chair, supplies and everything is in the motorhome and she injects (Botox) 3 clients in the motorhome.  Remainder of the time is spent not working.  It's a Mobile Botox RV essentially, traveling spa, whatever you want to call it.

Big thing is the business will be either buying cash, financing by bank or any other potential approach that might yield better savings over 5 years.  Thanks again.
 
Can you honestly answer the Q.......is my motorhome primary for pleasure use, with the sideline Botox business, or primarily the Botox business with the perk of using for pleasure?

Annually......how many times do you travel to Sun Valley where your wife performs her Botox treatments?
I don't know what the IRS would consider as a "reasonable" amount of times enroute to Sun Valley to qualify as a business.
Just a wild guess but I would think that once a month won't cut it.

 
If you do not keep accurate records of time or mileage used for business, the IRS will generally accept 80/20 (80% business, 20% personal).

You want to keep accurate records then use whichever method is best for you at tax time.

You see lots of RVs at NASCAR events and they are team owned.  You need to become familiar with depreciation schedules and what rule applies to your vehicle.

Spend time at www.IRS.gov  Considering the amounts of monies you are potentially dealing with, I'd spend time with a good CPA to properly plan.

 
Mixed use of an RV can be extremely difficult to write off, even more so than mixed use of a house. IRS rules basically say that business-use areas must be dedicated to that purpose and that's near impossible in most Rvs (toyhaulers excepted).  There is no problem writing off the expense of the business-use travel, e.g. fuel, RV park, and related travel expense, but attempting to write off the capital expense of the RV is going to require some careful planning and a really good tax accountant or lawyer.

It may be possible to make the RV 100% business expense and then deduct the proportion of mileage that is personal-use. Records will be the key to justifying that the RV is primarily business and that it is only occasionally used privately. If the business buys the RV and is the owner as shown on the title, that's a step in the right direction.

Nobody here can give you useful advice on your specific situation - get a skilled business tax professional to help.
 
There was a court case last year where a couple used a motorhome to travel to RV shows, I think as a mobile show room, they would also sleep in RV at night instead of getting a motel room.  The judge ruled this was mixed use, and an RV is an inherently indivisible space, and they ended up owing the IRS lots of money.  The sad thing is if they had just spent the night in motel rooms and used the RV as a show room, the motel rooms could probably have been written off as a business expense, along with the RV as a mobile showroom
 
Gary RV_Wizard said:
Nobody here can give you useful advice on your specific situation - get a skilled business tax professional to help.
Click to expand...

Indeed....." I heard it on the internet" is lousy advice when it comes to what the IRS rules are.
 
I did send the question to the accountant and I am sure he will have it all laid out, was just working on the spreadsheet and thought I would try the forum out.  The Mobile Botox Party business is certainly buying this for legitamate business, it's less of a company vehical and more like a food truck is to an established restaurant, we will just be using it for pleasure as well.  Thanks for all the comments.
 
I use my fourwheeler for work sometimes as well as my boat. I have a contracting business. My accountant doesnt recommend more than 50 percent. Mind you the four wheeler is a workhorse model, and the boat is a flat deck pontoon. I almost never use the boat for personal use, and the four wheeler only for a few days at hunting season so in reality it is more business than pleasure.
 
Mixed use of an RV can be extremely difficult to write off, even more so than mixed use of a house. IRS rules basically say that business-use areas must be dedicated to that purpose and that's near impossible in most Rvs (toyhaulers excepted).  There is no problem writing off the expense of the business-use travel, e.g. fuel, RV park, and related travel expense, but attempting to write off the capital expense of the RV is going to require some careful planning and a really good tax accountant or lawyer.

It may be possible to make the RV 100% business expense and then deduct the proportion of mileage that is personal-use. Records will be the key to justifying that the RV is primarily business and that it is only occasionally used privately. If the business buys the RV and is the owner as shown on the title, that's a step in the right direction.
Click to expand...

Gary really nailed it.  When we had our business in our home we devoted two rooms to the business and depreciated that portion of the total house.  We were very careful based on comments by the auditors my husband worked with as clients.  The depreciated space has to be a sole use, so for example, if your wife used the refrigerator for botox that needed to be refrigerated (I have no idea if it does, this is just an example), you could not use it for anything else if it was part of the depreciated area.  If she used the bed for patients to lie on during treatment then you wouldn't be able to sleep in it at night if it were depreciated.  Having been audited by the IRS you do NOT want to call attention to yourself and the uses you've stated might do just that.  I'm guessing your accountant is going to be talking about red flags.

ArdraF
 
A cautionary note from personal experience. A few years ago I received a television from a vendor as a "gift" for doing business with them for several years. The TV was worth about $1000. It never dawned on me, when tax time came around, that I had to declare it as income. The vendor was audited and apparently all of the recipients of "gifts" were then audited. The IRS found nothing but the TV during my audit but made me pay the taxes on the TV, fined me $1000, and I had to pay my accountant $800 to represent me. To make matters worse, I was audited the following year which cost me another $800 and got a notice from the IRS the year after that for a third audit. Because they never found anything more than the TV in the two previous years we protested the 3rd audit and they relented. The $1000 "gift" ended up costing me untold anxiety and $3000+. Don't give the IRS any "red flags". JMHO.
Bob
 
Gary RV_Wizard said:
That theme being legitimate tax avoidance...
Click to expand...

While writing off an RV is a bit challenging, deducting expenses related to it and of a business nature are not.  The Jackson case allowed some deductions.
http://www.rvforum.net/SMF_forum/index.php?topic=88494.0

If your RV is your personal residence, and it does not have to be your primary residence, your company (LLC, S-Corp) may be able to rent that from you for up to 14 days, tax free.  It is a deduction for your business, and tax free income to you.

Go to this blog, and scroll down to the article on "Can Rental Income Be Tax-Free?"
https://www.kaisertax.com/blog/

Remember, there is a big difference between "Writing something off" and having a write-off survive an audit.
 
This topic hasn't had a post in about 17 months, but, there's an aspect that hasn't been discussed about mixed use.  Although it's potentially more record-keeping work, you can write off the fractional use of a "structure" (the MH, in this case) by both time as well as area.  Part of the time element is how much time the area was available for business use, and not for personal use, as well as actually being used for appointments.  If you can show detailed records, minute-by-minute, as to when appointments could be made, but weren't, and they were interspersed with actual appointments, then you can deduct that fraction of the time for that fraction of the area.

Likewise, if you keep medication in the fridge, you can deduct the whole fridge if nothing else was ever stored in it during the period covered by the business tax return.  However, although you could theoretically store other things in the fridge at the same time and make a fraction-of-volume deduction, that could open you up to investigation and prosecution by medical regulators if you ever stored food in the fridge, whether or not at the same time as the medication.  Anything discovered and documented in an audit (e.g., especially a deposition) that might violate a non-tax law would be fair game as evidence for use in other legal proceedings, if an eager legal beagle got the idea to look for it.
 
@jim_manley, I know you posted over 12 months ago, but can you point to IRS rules online that allows the write off based on time spent?  I've been trying to find this info but haven't been able to.  My wife is planning to use an RV for her business but it will be parked 95% of the time and not traveling to clients.  If we can base it on time instead of on miles driven, that is a huge benefit to us.
 
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