I work for a very small company. Basically I am the only full time employee. Since I started there I have driven my own truck on the job and they have payed me per mile for my truck use. The company is looking at buying a brand new truck (A dodge cummins by the way) for me to use at work and they are also going to let me drive it for personal use.

Seeing this I see no reason to keep my truck so I am going to sell it. I was thinking about trading it in to the dealer when my boss buys the new truck so I don't have to go through the hassle of selling mine. I basically expect to get in the ballpark of what I owe for my truck so I would not see that much cash in the deal. How would this work would the company have to first buy the truck from me, change the title, then trade to the dealer, or could it all be done at once with me trading directly to the dealer as a trade in on the new company truck? Would there be anyway to make it a tax advantage for my company on the trade in if I were to "gift " the truck to them in exchange for them letting me drive the company vehicle for personal use?

 

That was the first thing that came to mind when I started reading this thread. If there are no tax experts on here, then you could probly call your CPA and they could tell you.

 

I would not even consider this trade in. You really need to keep your private stuff, from co-mingling with your job. Things may be rosey right now, but if something happens in the future, you will find yourself out in the cold, with the loss of your investment in the truck.

Let the company buy the vehicle, they have lot's of tax incentives to do so. Keep your truck, or sell it and invest your money in a way you can get it back one day should you need it.

Anytime you allow yourself to go into a deal like this, you need to have a written contract, showing specific values due you for your investment. This idea is just another lawsuit, waiting to come about.

That is the best advice I can offer

 

Right now I would be happy if the dealer gave me payoff for my truck. I would have no real investment in the company truck. The main reson I would do it is it would save me $400 a month on my truck payment, insurance, and worry of paying for repairs. I see it as a benefit to me. As to there being problems I am not sure what could happen. As long as I work for them I would have the truck to drive and if employment terminated the truck would be theirs and I would walk away. I am good friends with my boss and have worked for him for 10 years so I feel pretty confident about the deal.

 

Your best bet is to sell the truck outright on your own. Lary is right...don't mix your personal stuff with your business stuff. Good friends or not...things happen.

 

I understand what you guys are saying about not mixing business and personal but it is not like we are buying the truck together. I don't see what could happen. Am I missing something here? I am going to sell my truck and drive the company truck regardless. Why not "sell" it to my boss for the amount the dealer will pay for it on a trade and then trade it in? That way I don't have the hassel of trying to sell it. Basically all that would be happening is I would in effect be selling my truck to the dealer and my boss would be buying a new truck from the dealer. The logic behind it is if you just take your truck to the dealer and tell them to buy it they won't give you a good price but if it is on a trade for a new one then they will give you a good price.

 

BDOG,
I do not know what state your in! However, most states you may only "gift" a vehicle to a family member or if you own the company.The state will want it's sales tax and registration fees.

 

I would agree with Lary.
Right now, you are paying $400.00 per month on a truck that is YOURS.
If you trade in YOUR truck for one that will be owned by the company, you just gave your truck away.

Lets just say your current truck is worth $15,000.00
You trade that in on a new truck.
The new truck belongs to the company.
You leave the company next week, the company keeps THEIR truck and you walk home.
You are now out of that $15,000.00 investment.

Lary is right, you dont mix work and personal.
Keep your truck or sell it out right, but I dont think you really want to just give it away?

Rich

 

You guys are missing what I am saying. I owe 15k on the truck. I expect 15k trade in value. I trade the truck in my boss gives me 15k to pay off the truck. I am not giving away anything. I am just selling the truck for what I owe.

 

In that case, I did misunderstand your comment.
If your sure you dont want to sell it out right and your boss is willing to pay it off... then I suppose that would work.

To answer your first question, I would think that your company would indeed need to purchase your truck from you. They can not trade in a truck that is not thiers.

I dont think the dealer would allow you to do it "all at once".
The dealer doesnt give out 15k in cash.
Your best bet is to legally sell your truck to your current employer and let them do the dealing at the dealer.

Rich

 

Thanks for the reply. That was the reply I was looking for. Basically I was wondering about the all at once deal. I know dealers don't hand out cash but they pay off vehicles used in a trade all the time.

I guess if I sold the truck to my boss, he payed taxes, then traded it in and got a tax break for the trade in value then it would work that way, just more paperwork.

 

bdog,
ahhhhhh, now I understand

 

I'm a CPA so I will take a shot at answering you questions. Understand that I don't have all the details so this is general advice which may or may not be accurate in your specific instance.

First, the question about trading in your truck. Assuming the value of the truck equals what you owe on it, the dealership should have no problem accepting your truck as a trade-in and paying off the note. From a business perspective though, the Delearship will try to make sure that you get the short-end of the stick. Your company will be purchasing the truck, and if they are pressed on the purchase price, they will try to make up the profit on your trade-in. They have very little interest in keeping you happy, as you are buying anything from them, the company is.

As to the preferred way to handle the transaction, if you have done your research (use KBB.com to determine the fair market value (FMV) of your truck) and your payoff is equal to the FMV, what you should do is sell your truck to the company in return for them paying off the loan. If the FMV is greater than the loan payoff, you do not get a tax deduction for the difference, as I doubt your company is a (501-c3) charity. On the other hand, if you are upside down (Loan is more than the FMV) and the company takes the truck and pays off the loan, you will have constructive income for the difference and will have to pay income tax on that amount.

I am unable to comment on what your basis (tax value) may be in the truck. You probably have been claiming mileage on your tax returns, offset by what your company has reimbursed you. Usually, your company will reimburse you at the same rate as your mileage tax deduction, so that there is no net tax effect there. If you have been depreciating the truck, and now you sell it for more than the depreciated value, you may have a taxable gain to be recognized.

My advice would be, sell the truck yourself through autotrader. It would be a much simpler transaction for tax purposes.

 

I'm curious about this, too. Here in MA, sale tax is paid at the DMV. If I buy a truck from anyone of you, then trade it in without registering it, I'm sure Mass has a way of getting thier sales tax. I'd have to retitle it, so I'd have to pay there, but there must be a way the state would get paid.