| With gas prices at an all time high before Hurricane | | | | $80 in profit on them -- especially the new cars. Our |
| Katrina left her mark on our nation, most Americans | | | | new car profit margin is at its lowest ever. At this point |
| were hoping that gas prices would settle down once | | | | we're just glad to sell the car and bring in some |
| summer passed. But gas prices have jumped as much | | | | inventory."Now that gas prices have gone through the |
| as 80 cents a gallon across the country once | | | | roof, small business owners are working furiously to |
| Hurricane Katrina destroyed the Gulf Coast and | | | | dump those 6,000 pound gross vehicle weight fuel |
| impacted all of our lives.While Hurricane Katrina is a | | | | guzzlers they bought only a year or two previously |
| horrible tragedy, it's not just affecting the Big Easy. | | | | under a tax loophole which allowed small businesses |
| Hurricane Katrina will impact every single American | | | | to write-off most of vehicle cost in one year.Mr. Brown |
| that commutes to work, takes a vacation, or shops | | | | has experienced this situation on a larger scale than |
| online.Company Car vs. Mileage AllowanceCompanies | | | | most of us, adding "People come in to trade their |
| and individuals alike are now concerned that the | | | | larger trucks and SUV's with poor gas mileage for |
| federal mileage deduction or their company's gas | | | | smaller, better gas mileage vehicles. Most consumers |
| mileage reimbursement will no longer cover the costs | | | | are not only so upside-down (owing more on the car |
| of operating a vehicle for business purposes.At the | | | | than its fair market value) but are finding it hard to |
| beginning of 2005, the IRS standard federal mileage | | | | trade-in these larger vehicles. Not only they are valued |
| reimbursement rate for business use of a personal | | | | less because of gas prices but people just cannot |
| vehicle (including vans, pickups or panel trucks) was | | | | afford the fuel that would be needed to maintain these |
| 40.5 cents a mile for all business miles driven, up 3 | | | | lower gas mileage vehicles."Weighing your OptionsYou, |
| cents from 37.5 cents a mile in 2004; The primary | | | | too, may have to analyze your business vehicle |
| reason for the increase was higher prices of vehicles | | | | deduction options, now that high fuel prices seem like |
| and fuel in 2004.Christopher Tanis, District Manager of | | | | they're here to stay. You may find that while |
| a restaurant chain in New York State travels for | | | | maintaining a mileage log and claiming a car deduction |
| business to 5 different stores per week. For him, the | | | | or mileage allowance isn't right for your situation, the |
| 2005 federal reimbursement rate worked out quite | | | | IRS will allow you to deduct actual vehicle expenses |
| well, and he opted for using his personal vehicle instead | | | | based on the percentage of business vs. personal |
| of using a company car. Now that fuel costs are so | | | | miles. For those who use their vehicle mostly for |
| high, he's decided to re-examine the financial feasibility | | | | business, minimal personal usage combined with the |
| of mileage reimbursement.Poor Gas Mileage Cars are | | | | burden of record-keeping may justify a company car. |
| Losing ValueChris Brown; owner of Auddie Brown | | | | There's no right answer for everyone. Literally, your |
| Superstore, an automobile dealership located in | | | | mileage may vary. Consider your options and you'll find |
| Florence, South Carolina, commented "I think [the jump | | | | the way to steer yourself to the best tax advantages |
| in gas prices resulting from Hurricane Katrina] is | | | | in these new circumstances.Ann-Marie Patero is a |
| ridiculous because they act like we're running out of | | | | freelance writer for Envision Software, publisher of |
| fuel and we've got plenty."Selling cars, the standard | | | | Consulting Mentor, a website providing Consultant |
| expense for selling each vehicle used to include a full | | | | Resources and Consulting Articles to Consultants |
| tank of fuel when they bought a car, once the price hit | | | | world wide. If you're a consultant, freelancer, or |
| $2.50 a gallon, Chris starting limiting his fuel allowance | | | | considering starting your own small business, the |
| to $10. Chris explains, "Some cars take $80 worth of | | | | resources at Consulting Mentor will help you improve |
| fuel to fill up and on a new car we're lucky if we make | | | | your effectiveness, profitability, and overall success. |