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T
Tenn Jeff
Level 3
September 22, 2020
Question

Dealer Auto "Day Rental"

  • September 22, 2020
  • 4 replies
  • 27 views

What is the correct tax treatment for industry practice of "day rental" of inventory vehicles by auto dealer:  (1) reduction in basis or (2) recognition of rental income with depreciation of vehicle?  

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4 replies

IRonMaN
IRonMaN
Level 15
September 22, 2020

If they hold vehicles specifically identified as rental vehicles, they get depreciated.  

Slava Ukraini!
    T
    Tenn JeffAuthor
    Level 3
    September 22, 2020

    Thank you.  I agree with you, but they hold the vehicles in inventory - for sale - but, strangely, engage in day rentals.  A bizarre hybrid status.  It is alleged this is a common practice in the industry.  Thanks again.  

      IRonMaN
      IRonMaN
      Level 15
      September 22, 2020

      Then you have rental income and no direct offsetting expense.  The "expense" will come later when they will potentially get a reduced selling price for the vehicle somewhere down the road.

      Slava Ukraini!
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