Hello everyone I would apreciate all responses.
I am looking to buy a work truck. I want to borrow $20,000 from my father. I am going to pay him $500 a month. That's going to be a business expense on my taxes. What would it be on his taxes?
Wed Jul 19, 2006 5:34 pm
coaster Senior Advisor
Cash: $ 1626.30
Joined: 11 Oct 2005
If you're paying him interest, I think the interest would be taxed as ordinary income for him. However, I think you should check into your business expense deductions, too. The $500 monthly payment isn't a business expense. The purchase price of the vehicle is an expense, and the interest on the loan is an expense. As far as how the vehicle is reported, you want to look into depreciating and expensing business assets. Probably if you're a sole owner of a new business, you want to look at the Section 179 deduction.
Personal opinion should never be substituted for professional tax advice.