Heil Harvesting, Ulysses KS/Limon CO | This is true--It is a way to transfer dollars, but dollars (deductions) could be used for other capital purchases or deductions. I am a lot more concerned in investing money in ways to make money than taking a tax break to enhance my personal income. Just because I am Peter and Paul does not mean that paying Paul X because Peter can afford it is the best option for Peter. Peter may be able to invest those dollars (in a tax deductible manner) that will make him more dollars the next year. If he pays Paul an over inflated price he does not have access to those funds to reinvest.
Just like buying a tractor, just because you have a good year will you buy a tractor that costs $10000 more for an identical tractor , identical service etc.? You can take the deduction and get a larger deduction that way.
I understand where you are coming from, and from a strict tax standpoint, that might be the way to go. But at that price, the business owns its own vehicles and personal owns its own vehicles.
Cost per mile varies year to year and obviously trends upward. Spikes here and there. Trying to figure out what the cost 'is' is difficult.
It is mutually beneficial for Peter and Paul in our current situation, the cost to Peter needs to be cheaper than his cost to own and profitable to Paul.
Looking at ideas for establishing value for 2011.
EDIT: What I am getting at, long term paying the overinflated price is not good for Peter or Paul. My long term income should be based on money made (my value), not maximizing tax deductions in the short run. Reinvesting the money should enhance my income long term. Paying an overinflated price right now does no good.
Edited by beh 12/23/2010 19:26
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Pickup price per mile (personal vehicle for business use or vice versa)
