Various financial things associated with leasing a "company" car

[guapo337]

So because of a relatively large profit in the company my father works for, he may be getting a company car as a lease. Contrary to my suggestion of a G35x or waiting for the 2005 Subaru Legacy GT, my father has basically decided if he were to get a company car, it would be a 2004 Subaru Legacy (GT, most likely). I know that there are some tax stipulations/advantages to a company car that is a lease. The car would also be used for personal use, as well. This company is small, so policy is flexible as far as that goes.

What are the various advantages/disadvantages/stipulations/benefits to a leased car through a company? How much can be saved in taxes each year?

How much money per mile does the IRS compensate you with? I've heard things about that, but I'm unclear.

How much can we expect to pay per month on a 2 year lease of a Subaru Legacy GT (~27k)

 

[Dunbar]

Well, let's say the Legacy costs $25k out the door (with taxes/fees etc.) Then you look in the IRS pulication 15-B to determine the annual lease value of $6850. He has to determine what percentage of the time is not being used for business use (and be able to back it up during an audit!) So lets say 60% of the time is commuting/personal use than $4110 (plus 5.5 cents per mile for gas if the company pays for it) would go on the W-2 as personal income and be taxed just like additional income. Here is the page I got the answer from.

A company car is a good deal but if the majority of your time is personal use than it only saves you like 30-40% (instead of being free as many believe.)

 

[guapo337]

So you determine a percentage of time, not miles?

 

[EagleKeeper]

Originally posted by: guapo337
So you determine a percentage of time, not miles?

I think that using the time percentage is used as an example for determining the value of the car as a benifit. The benifit is taxable

For personal vehicles, the percentage of time equates for expense determination.