I’ve frequently commented on how leasing vehicles is a big rip-off for several reasons, especially the 20% to 30% implicit interest rate built into the payments.  The per mile penalties for excess mileage also add to the deceptively low monthly charge. 

Until I saw this article, courtesy of AutoBlog, I wasn’t aware that lessees weren’t covered by the same manufacturer’s warranties as are buyers.  The guy in the article won his case to be covered by the warranty, but he had to go through the expense and hassle of bringing legal action against Honda. 

One more reason to stay away from vehicle leases.

Q:

Kerry,

 

I found your site very helpful. Thanks.

I am trying to plan my 2005 tax year.  I have a pavement marking business which is a C Corp with it’s year ending in March.  I am trying to get the income below the magic $50,000 income level taxed at 15%.  Anyways I have been considering changing to a S Corp since this coming year 2005 I will have a substantial bottom line after 350,000- 400,000 maybe higher.  The problem for me is I am also the guy with a ex-wife which is receiving 29% and she does not have a clue that my business has expanded since we split.  My lawyer tells me a C Corp is better and my account tells me a S Corp is better if it has a lot of cash left. 

 

Anyways, I am trying to plan for the future modification of child support (even though it settled very well for her) I know it will never be enough if she looks in the corporation- which I think she has the right to in a discovery.  It has been a little over a year since the divorce was final. 

 

Currently I am engaged and will be married in Sept of this year.  Is it possible to maybe form a S Corp in her name and assign the large contract to my new wives company and keep the income lower in my C Corp to help us get the out without opening me up to the above problem.  Any thought would help,  I appreciate it very much. 

A:

Check out what I have here on my website and you will see a case very similar to yours regarding child support:

From what you are saying, it seems that using an S corp would make matters worse for you.

Good luck.

Kerry Kerstetter

Q:

Kerry,

 

   I live in the state of Arizona and bought a new home 13 months ago.  I’m in the process of buying a second home and would like to sell my current home,  but I’m worried that I will be hit hard with a capitol gains tax at the end of the year for selling my first home before the 2 year mark.  I came across your website that was filled with great information which I also read on the IRS webpage.  Do you know where I can find more information about the  ‘pro-rated exclusion ‘ listed on your webpage.  I know of the three main categories (health, work, or other unforeseen circumstances.) ,but I want to know more about the specific excuses that are acceptable for each of the categories.  I have some reasons for moving to the other side of town, but I’m not sure if they would pass for legitimate claims to get the exclusion.

 

Thanks,

 A:

 It would be impossible for IRS to list every single reason to justify the use of the pro-rated exclusion; so I wouldn’t hold my breath waiting for that to be released.

Those main categories are very wide, especially the “unforeseen circumstances” one.  If something unexpected has changed in your life since you bought your current house that requires you to move, you should be okay.

Check with your personal tax advisor for more specific planning.

Good luck.

Kerry Kerstetter