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Old 03-06-2013, 01:56 PM   #1
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Writing off Airstream to business

Hello everyone. I was curious if anyone writes off their Airstream as a business expense? Partial or full? We are going to be traveling in it full time and own our own business.

Also, did insurance have any issues if the Airstream was going to be used for business?

Thanks!
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Old 03-06-2013, 02:05 PM   #2
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This is a question I would pose to my CPA. (I, too, own my own corporation, but am VERY cautious about crossing boundaries between personal and corporate expenses.) My home is my corporate headquarters and after computing the expenses to operate my residence, he computes the amount I'm allowed to reimburse myself for using my home. The insurance question should be posed to your insurance agent. Better to ask these questions up front than find yourselves behind the IRS' 8-ball. At least in CT you don't have to deal with the state tax people as well....
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Old 03-06-2013, 08:50 PM   #3
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Thomas,


Interesting question! It seems to me that this would be inviting more possible trouble than any benefit would be worth. Reason?


I believe the same rules would apply here as for an Office in Home (OIH) in a fixed residence. That is, you would need to identify an area used “regularly and exclusively” for business administrative use or for meeting clients or customers in the normal course of business, or for storage of inventory or product samples if you’re a wholesaler or retailer.



“Regularly” means just that – not occasionally. And an “exclusive” business use area would be a pretty tall hurdle to clear in an AS in my opinion (and mighty hard to sell to an IRS auditor). If you could meet it, though, you could deduct (based on the percentage of business use) park fees (rent), propane (utilities), mortgage interest, property taxes, etc., as well as depreciating the business portion of the unit.



As far as the TV – I wouldn’t go there at all. If you’re full-timing, then your “tax home” is wherever you’re parked, so you’re never “away from home.” (Exception – you unhitch and go see a client or go to the office supply store. Or (aggressively) you might claim park fees while attending a business convention… )
But there’s nothing preventing you from claiming all the “ordinary and necessary” business expenses, including business meals and entertainment expenses, and if you itemize you still can deduct mortgage interest and property taxes on your “second home” (or first).


You might indeed want a business rider on your insurance to cover business assets and possibly customer liability if you meet them in the AS, but that’s a question for the insurance guy. If you did need a business rider, the premium would of course be a business expense.



Personally, I would probably decline to prepare a tax return for a client who insisted on claiming OIH expenses in an AS -- unless of course the unit had been modified for food service/catering or some other use that rendered it unsuitable as a residence. And the idea of doing business/earning money in multiple states with difference tax codes and all wanting their nickels – ouch!



Just my quick take on the question ...


Dan Hemphill EA


To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing, or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.
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Old 03-06-2013, 08:56 PM   #4
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I asked my CPA this question recently, too. He said that the best option was for us to rent our airstream to our business either per trip or per month, but make sure we had it in writing and that it was a reasonable charge. I believe that this income is then taxable personally but at a lower rate. He said it would be up to the terms of the lease agreement between you and your business as to who covered what expenses such as insurance, maintenance, etc. It just needed to be documented in writing.
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Old 03-06-2013, 09:40 PM   #5
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The business would have to be some other legal entity than you, and it would have to have a legitimate business need/use for the AS, not just tax avoidance. Else it's a sham transaction -- which is frowned upon. Don't know why the tax rate would be any lower -- rental income is taxed at ordinary rates.
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Old 03-06-2013, 10:10 PM   #6
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Dan - good point. Our business is an S-corp which I didn't clarify. Since my husband is a mobile RV technician, he needs to tow the Airstream along if he is working away from home for lodging and office space. So sometimes it is used for business and sometimes for pleasure. That must be why our CPA recommended a per trip rental agreement. My understanding is that it is a way to compensate us personally for the airstream wear and tear without increasing his salary draw from the business. Not sure that I have a full understanding of what our CPA meant by lower tax rate either? Is rental expense a lower tax rate than salary expense from the business perspective perhaps?
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Old 03-06-2013, 10:16 PM   #7
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I owned my own Snap-on Tool business for nearly 17 years. Owned the truck and the inventory. Used my home phone as the business phone. Did paper work in my home office. There were several other items which could be considered "business".

I never claimed any of my home as OIH, not the phone, nothing. I kept the truck expenses totally separate. I was always careful to keep all business expenses totally separate from any home expenses. Many times I used our 42' houseboat to entertain business associates, but never claimed any of that as business expense as we also used the boat for pleasure.

Why be so careful? I didn't want to spend any of my selling time trying to explain something to someone at the IRS who's job it is to get more of my money. That time could cost far more than the few dollars in taxes I may have saved.

That policy worked. Never got called for an audit. Everyone was "happy, happy, happy", especially me.
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Old 03-07-2013, 06:59 AM   #8
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Alumawife,

The treatment depends on all the facts and circumstances, and I can see now why your CPA recommended what he did.

And yes it might make a tax difference -- the rent the S-Corp pays you would be taxed as ordinary income, but if it helps reduce "reasonable compensation" (wages) to Alumahubby (?) then you could be saving on payroll taxes (SS and Medicare). So (an "aha" moment ...) it makes sense for you.

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Old 03-11-2013, 12:17 PM   #9
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Thank you for all the insights. Talked to CPA and he didn't think we could make it work without raising red flags. I do not want to raise any red flags, ha. Guess I will stick to mileage when using truck for business.

Thanks again!
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Old 03-11-2013, 12:23 PM   #10
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Your RV also qualified as a second home and you can deduct the interest from your taxes.

Tax Deductions For RV Owners by @FunRVing The Fun Times Guide to RVing

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Old 03-11-2013, 12:32 PM   #11
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Originally Posted by damonbeals View Post
Your RV also qualified as a second home and you can deduct the interest from your taxes.

Tax Deductions For RV Owners by @FunRVing The Fun Times Guide to RVing

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What if it is a first home?

We are selling everything and going full time very soon.

Hmmm. I will have to look into this!

Thank you
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Old 03-11-2013, 01:46 PM   #12
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We have a friend that writes his off as a mobile office. And they do use it for that purpose occasionally. But as you probably know, if you write it off (depreciate it), when you go to sell, you have to pay capital gains and since Airstreams don't depreciate as fast as you could 'write it off', there will be tax due. We may use ours as a mobile office occasionally also. I think we will rent it to the business.

If you just deduct the interest as a first or second home, nothing comes back to get you. A bigger deduction now days would be to expense the fuel to haul it around.
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Old 03-11-2013, 01:57 PM   #13
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Definately depends how you structure it.

As far as taxation goes, this is no different from if you traveled town to town and stayed in hotels. The travel expenses, lodgings, meals & incidentals are all deductible. Your RV expense is the same treatment. You are deducting it as lodgings expense, not as an office or workplace. Your accountant should understand this. Lodgings expense does not through up "red flags". Home office deductions do. Also keep in mind, lodgings, meals and incidentals cannot exceed the values for a location shown in the CONUS tables. These are the federal reimbursement per diem guidelines - something else your accountant should know about.

As far as insurance goes, you are using this as lodgings - not ferrying passengers or having the public sit in your RV. What complicates matters is if you rent the RV to your business or have signage for your business on your RV. Then you may need a commercial policy, which can be quite expensive. If you are just traveling in your RV, and then going out in your truck to do the repairs, then I would just keep a regular policy on your RV.

If you decide to rent your RV to your business, here's what I would do.
Set up an LLC called "RV Rental". Transfer ownership of the RV to the LLC. The LLC can then depreciate the value of the RV over 3-5 years to offset the rental income. Insurance and maintenance costs could also be deducted. All this to hopefully balance offset the rental income.

Deduct the rental expense from your primary business. The downside with this strategy is you really need to turn-over the RV to a new one by the time you'd have to start paying taxes on the rental income. If then you trade, there would be no capital gains, because you are incurring additional expense (a new or different RV). If you just liquidate the RV, then you may have a gain from that sale because you had taken the depreciation. Didn't your accountant explain something like this?

Good luck with the tax man!
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Old 10-12-2014, 09:50 PM   #14
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Yes we deduct the expense of traveling in our AS to promote our campground.


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