The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

By Dr. David Edward Marcinko MBA CMP©

SPONSOR: http://www.CertifiedMedicalPlanner.org

COST COMPARISONS

Example 1: Dr. Kurt purchases an automobile for $15,000.

His hospital business use is 80% and he drives 20,000 total miles per year.  Operating costs for the year, including gasoline, oil, insurance, maintenance, repairs, and license fees, are $4,000. If Kurt owns the car for five years, ownership will cost $35,000 ($4,000 x 5 = $20,000, $20,000 + $15,000 = $35,000), or $7,000 per year. For, each personal use mile costs $1.75 (100% -80% = 20%, 20% x 20,000 miles = 4,000 miles, $7,000/4,000 miles = $1.75). Kurt’s employer reimburses him 34.5 cents per mile for the business-related miles. As a result, the business use of the car is only partially reimbursed (16,000 business miles x 34.5 cents = $5,520).  

However, the business usage costs Kurt $5,600(80% of $7,000). Kurt subsidizes the employer 9.25 cents per mile ($7,000 – $5,520 = $1,480, $1,480 /16,000 = 9.25 cents). Kurt’s total cost of ownership is $1.84 per mile, or $36,850 ($1.88 x 20,000 personal miles over the five-year life).

Example 2: Dr. Ben uses a hospital employer-provided vehicle 4,000 miles per year in 2003.

He reimburses the employer 34.5 cents per mile. His cost for five years is $6,900 (5y x 4,000 = 20,000 miles, 20,000 miles x 34.5 = $6,900).

Beginning on January 1st 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) were:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

Note the dramatic contrast, from the employee’s perspective, between the above two examples, of the company reimbursing the employee for business use of his personal car, versus the employee reimbursing the company for personal use of the vehicle.

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

Source: http://www.irs.gov

ASSESSMENT: Your updated thoughts in modernity are appreciated.

ORDER Textbook: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

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THANK YOU

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Filed under: "Doctors Only", Accounting, Career Development, CMP Program, Taxation, Touring with Marcinko | Tagged: auto costs, Certified Medical Planner™, CMP™ Course, EMPLOYER-PROVIDED TRANSPORTATION BENEFITS, Transportation tax benefits |