Tax questions

March 15, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

I am a day care provider and am planning to lease a minivan for my business. The main purpose of the van will be to convey my students to/from school to my day care facility. What are the tax benefits if I lease this van?

You have the choice of deducting a standard mileage rate (32.5 cents in 2000) per business mile driven or deducting the actual cost of using the minivan for business. The actual cost includes the lease payments, repairs and maintenance, gasoline and oil, insurance, etc. These costs are deductible only to the extent you use the minivan for business. You must keep records that show both the business and personal use of the minivan. Based on these records, you determine the percentage of business use of the minivan. That percentage is then multiplied by the actual expenses you incurred to arrive at the amount that is deductible. If the minivan you lease has a market value in excess of $15,500, you must also add to your income an inclusion amount based on tables issued by the IRS. The inclusion amount is determined based on the value of the minivan.

Bill Cronin, CPA Weyrich, Cronin & Sorra, Chtd. The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

Selected questions will be answered in the Business section. No questions will be answered personally.

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