In today’s economy, No money, little money, low money down is available on semi trucks, big rig trucks, over the road trucks and tractor trailers for repos and off leases. After December 25^th, we are seeing tremendous buying opportunities at Walmart, Target, Best Buy and other retailers across the United States. Why shouldn’t the trucking industry be any different.

 

At the present time, lenders/dealers are loaded with repo and off lease trucks and trailers. These inventories are disrupting them from continuing their normal selling practices. In addition, these huge inventories are hurting their working capital and related cash flow. Today, we are seeing dealers/lenders offering concessions on a combination of pricing and financing.

 

Some lenders/dealers are offering guaranteed financing and no money down to commence a buying opportunity. These economic conditions have given the first time buyer a large opportunity to enter this market as an owner operator. This can enhance their earning potential and free them from the employer/employee relationship. On the other hand, businesses looking to expand their fleet can use this favorable opportunity to obtain additional trucks and trailers for no money down or very little down and favorable financing. 

 

Some lenders/dealers have waived strong credit scores as a criteria and will approve applicants for repos and off lease trucks that have credit scores below 600. All the lenders have different lending and financing options, therefore it is important to shop around and compare the information. In addition, the available repos, off lease trucks and trailers have been reconditioned and are ready to put back out onto the highways.

 

Examples Of Semi Trucks, Big Rig Trucks, and Over the Road Trucks and Trailers we are talking about include:

 

Kenworth, Peterbilt, Mack, Freightliner, International, Volvo, Western Star, Great Dane, Fontaine, Wabash and Utility

 

In conclusion, this economic downturn has created a buying and financing opportunity for the startup owner operator and the business that wants to expand its fleet. It is not unheard of that these lenders/dealers offer multiple units to a seasoned business for an expansion opportunity.. These financing deals usually are for sixty months and offer buy out clauses from $1.00 to 20%. It is always advisable for the buyer to consult a professional before acquiring and financing a truck and/or trailer. Additionally, there are new depreciation rules into effect for 2008 and 2009 that the buyer should be aware of …..

 

Happy hunting for your repo and/or off lease acquisition…

 

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As we come to the close of 2008, this economy has caused a volatile year for many. Many Americans have had to scramble to make a living and adjust to changing times.  With higher gas prices and costs of living escalating to new levels, many businesses are on the brink of extinction. For the lucky few, that have had a profitable year, it is time to maximize the situation and plan to minimize the tax burden.  The government has made some substantial changes in 2008 for investing in the U.S and we are going to look at the depreciation area for qualified acquisitions.

 

The following is one of the incentives that is available for 2008:

 

2008 Changes for Eligible Depreciation ( Look at the example below)

Increased Section 179 limits. The maximum section 179 deduction you can elect for qualified section 179 property you placed in service in tax years that begin in 2008, has increased to $250,000 ($285,000 for qualified enterprise zone property and qualified renewal community property). This limit is reduced by the amount by which the cost of section 179 property placed in service in the tax year exceeds $800,000. For qualified section 179 Gulf Opportunity (GO) Zone property placed in service in certain counties and parishes of the GO Zone, the maximum deduction is higher than the deduction for most section 179 property.

Special depreciation allowance for certain property. You may be able to take an additional first year special depreciation allowance for certain qualified property (defined below). The allowance is an additional deduction of 50% of the property’s depreciable basis (after any section 179 deduction and before figuring your regular depreciation deduction).

Property that qualifies for this special depreciation allowance include the following.

• Tangible property depreciated under the modified accelerated cost recovery system (MACRS) with a recovery period of 20 years or less
  
• Water utitiliy property
  
• Off-the-shelf computer software
  
• Qualified leasehold improvement property.

 Examples of Qualified property are below and must also meet all of the following tests.

Dump trucks, bulldozers, excavators, semi trucks, backhoes, boom trucks, concrete trucks, cement trucks, septic trucks, concrete pumps, garbage trucks, water trucks, vacuum trucks, farm equipment and tractors, machinery and equipment, heavy equipment, production equipment, medical equipment, computers, office equipment etc

 You must have acquired qualified property by purchase after December 31, 2007, and before January 1, 2009. If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify.  Additionally, the

• Qualified property must be placed in service after December 31, 2007, and before January 1, 2009 (before January 1, 2010, for certain transportation property and certain property with a long production period).
  
• The original use of the property must begin with you after December 31, 2007.

In a nutshell here is an example to illustrate the information above. Lets assume the following facts. You are a corporation, sole proprietorship etc and your net profit is $600,000  from January 1, thru October 31, 2008,  November and December will be a breakeven therefore, we are at the $600,000 profit for the year based upon our estimate.  We have some new signed contracts for the end of 2008 or beginning of 2009 and we need to buy some major equipment in the last month of the year and take delivery before the end of the year. We can get this equipment financed and the monies required down are minimal, maybe $10,000, and the total purchase price is $400,000…..If we execute this contract before the end of the year and take delivery, we are entitled to a $325,000 deprecation expense deduction for 2008. The way I came up with is deduction is by studying the information above. The first $250,000 of qualified acquisitions are dollar for dollar and the balance is $75,000  ($150,000 x 50% = $75,000)  . The $150,000 is the remaining basis after deducting the special $250,000 from the original acquisition cost of $400,000. It is important to understand that the cash outlay of $10,000 has nothing to do with the depreciation deduction for 2008.

  Obvious from this example, this could be a big bonanza to reduce taxes in 2008 without the major outlay of upfront money. It is important to obtain current interim 2008 financial statements from your CPA, bookkeeper, or in house books now to study your tax situation for 2008. This example above can be scaled back or up to a smaller or larger version and can have a tremendous impact on your company’s 2008 tax situation. These depreciation rules only apply to a profitable company and shouldn’t be considered for additional operating losses. Additionally, it is recommended that you consult with a qualified tax person because this tax law change is new and is higher upgraded from the allowable deductions for 2007.. For  companies looking to acquire qualified assets for 2008 with substantial profit, there are limitations and phase out rules for acquistions over $800,000.  Tax planning is important at this time of year whether you are Profitable or not and consulting with a qualified tax person is as equally as important . The dollars invested in this area, if done properly, will reward your company handsomely..

 

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At we come to the conclusion of 2008, many businesses, including construction, trucking companies and farmers, have lost money in this year. The economy for 2009 looks very volatile and some industries may start to recover in 2009, while others may take a little longer.  One positive area to bring to the table is that the price of oil has decreased significantly and regular gas prices have come down to $2.00 or so per gallon depending upon your location.  The question through this difficult year where losses have mounted up, why do you have to tax plan?  If you were profitable in year 2006 and/or 2007 and paid business taxes in those years, you may be entitled due a tax refund in 2008 to recover part or all of these monies paid in previous years. This tax recovery is called a net operating loss carry back claim…This situation applies to proprietorships, corporations, limited liability corporations, and so forth.

 

The first part of this discovery phase is to identify whether you are a qualified individual and/or company to recapture monies paid in from prior years…It would be a good idea to obtain from your accountant, bookkeeper, CPA, or your own in house books an updated balance sheet and profit and loss statement for 2008. Additionally, you may want to locate your 2006 and 2007 either personal and or corporate tax returns and review the past years information. If you have paid business taxes in those past years and are in loss situation for 2008, there is a good chance you will be able to recover either partial or all monies paid to the

government for 2006 and/or 2007..If you are a farmer and have losses in 2008, you should locate your 2003, 2004, 2005, 2006, and 2007 prior years tax returns because your eligible carry back years extend back for five years. Everybody else, for the most part, can carry back their business losses two years…

 

 Once you have located your prior years tax returns and reviewed the business taxes paid into those years, compare this to the 2008 Profit and Loss Statement. It is good idea that your 2008 information should be current and accurate because it could have a major effect on your decision making. Assuming you are in a loss situation for 2008, you may want to plan you year end cash flow accordingly. For this illustration, we will assume everyone is on a cash not accrual basis accounting system. Because of your tax situation and the possibility of recovering a tax refund back in early 2009, you may, if cash flow permits, pay more bills in December 2008 than the normal January 2009 payment cycle. The bottom line here is that a qualified professional should be assisting you at this stage because of the cash flow and tax effect though the period ending December 31, 2008.  The professional cost vs tax recovery benefit could be a big plus to you.

 

 Here is a scaled down example for mostly everyone except farmers and other exemptions. Lets say you had business income in 2006 for $20,000 and business income in 2007 for $30,000. From your 2008 Profit and Loss Statement through the end of October, you have a $40,000 Loss.. We are in the middle of November 2008 and you can control your business for a zero profit for November and December 2008 with $20,000 of bills due January 1, 2009….If we don’t do anything else, we can carry back the losses, once the 2008 personal and/or corporate tax return is filed, $20,000 back to 2006 and $20,000 to 2007. Depending on your tax bracket in those years, you will have a nice refund.                  

 

For this example, if we have an opportunity to pay $10,000 of additional bills before December 31, 2008, if your cash flow permits, lets see what this means. The difference of a couple days would mean that we would recover at a minimum $1500 of additional taxes paid in prior years. Not paid for shifting some paid bills for a couple of days.

 

The following procedures are needed to get your business tax refunds back as back as quickly as possibly. First you need to file your normal 2008 personal, corporate, LLC, Partnership etc tax returns as quickly as possible in 2009. Once these returns are filed with the Internal Revenue Service, you can file the carry back claims on either form 1045 or 1139 depending upon your tax structure. If you are a C Corporation, you don’t need to file your personal tax return as part of this carry back process.

 

 The carry back claims will be processed by the IRS as quickly as there system permits and the individual and/or corporate entity could be receiving a refund check somewhere in the first or second quarter of 2009.

 

This carry back claim process is important because it can generate needed working capital if the economy hasn’t recovered in your niche for 2009. Additionally, with all the available acquisition and financing deals available for commercial vehicles and construction trucks and equipment, these monies could be used as a down payment or a combination of working capital and acquisition funds.

 

These carry back claims can be carried back two years, except for farmers, five for them, and if needed carry forward for twenty years. It doesn’t matter what your business structure is…There are exemptions to these rules and you should consult your tax professional for advise on these carry back and carry forward rules. 

 

In conclusion, 2008 was a trying year for many, but this recapture of tax monies shouldn’t be ignored. If done properly, you can get a head start on 2009 and have a profitable and less stressful year… … Who says Tax Planning is boring. 

 

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As the economy has weakened, many lenders have changed their lending models. Many lenders have shied away from the transportation area and concentrate on other lending portfolios. Limousines, Limousine Bus, Hearst financing has become tighter as the economy has weakened and this credit crunch continues.



In the financing market today, Limousine Financing has A-C lending. To qualify for A lending, the applicant must have at least three years time in business, five figure business bank balances, minimum personal credit score of 675, and a low ratio of debt to income ratios. Additionally, the owners of the limousine company shouldn’t have any prior bankruptcies. If the limousine applicant qualifies, the minimum down payment should be first, last and possible some documentation fees. The limousine lender will finance this acquisition from 36-72 months depending upon the age of the limousine, bus, etc acquired. This limousine financing arrangement will pass title at the end of the term subject to the state the arrangement was commenced in.



B and C lending for the most part is similar but the minimum person credit scores of the applicants will range between 600-675….B Lending will range from 640-675 and the applicant should be in business at least a couple years. The minimum business bank balances require mid to high four figures….Once again the lease terms and passing of title is similar to the A Credit…



C Lending is similar to A and B lending but the minimum credit requirements are 600 or higher. The business bank statement requirements are usually low to mid 4 figures.

The lease terms and passing of title is similar to the A and B Credit requirements…



Obviously, there are differences in Lending A-C requirements but the lending formula is basically the same. The rates, the front money between lending levels will vary

Depending upon the lenders. Additionally, most of the lenders have application only programs up to some stated dollar amount. Over these basic levels, the requirements will be full financial and tax documentation.



Startup Limousine financing is a different area. Today, many lenders will shy away from this because of the risk factor. Other lenders that will finance this niche but will require a substantial down payment and the rates will be sky high. Additionally, the minimum person credit requirements are 600 or higher.



Either way, most limousine financing will require personal guarantees.



The type of transportation vehicles for this article include:



Limousines, limousine busses, mini-vans, limo sedans, sedans, busses, school busses, coach busses, vans.



The types of limousines include Lincolns, Chrysler, DaBryan, Ford Excursions, Mercedes, Stretch Limousines, SUV, Hummers, Escalade, Navigator, Cadillac, Tiffany



In conclusion, the transportation industry is going through the same tough credit financing as all other industries. As we passed through tough times for gasoline prices and the economy has slowed down, 2009 could be a challenging year. One positive sign that we are seeing at the present time is lower gas prices. Hopefully as the travel and entertainment economy recovers, the limousine industry will expand accordingly.



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