As a financial planner, how should I handle my large tax liability to the IRS?

As a financial planner, how should I handle my large tax liability to the IRS?

by David A. Caplan, CPA | Nov 07, 2017

I am a financial planner and have a large tax liability for 2017. I am thinking of possibly buying a truck (over 6,000 lbs.) for 50 percent plus business use. We do travel periodically and entertain clients, too. We plan on keeping it in use over the next six years. I'd rather pay for (finance) the truck than pay the taxes to the IRS. Is this not a good idea? 

I do not think this is a good idea. First, it’s hard for me to understand why a financial planner would need to purchase a truck over 6,000 lbs. The fact that you entertain clients also has nothing to do with the purchase of a truck.
Second, it is not clear in your question where the large tax liability you mentioned is coming from? When you look for potential deductions for a business, they need to be consistent with the business, or they will be questioned by the IRS. In a service business such as yours, one would expect to see office rent, telephone, Internet, office supplies, dues, and some limited mileage. If you take depreciation on a truck, it is likely that it will be questioned by the IRS as there is not an obvious connection between the truck and business expenses consistent with those of a financial planning firm. 

I recommend discussing your situation in more detail with a CPA to help you identify appropriate business expenses and establish the next course of action.
For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: David A. Caplan, CPAis a sole practitioner in Lafayette Hill, Pa.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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