Ford's tax credit availability

[Woeo]

But it would not be available for the "specifically assigned function" (i.e., for use by the impending owner).

This decision supports your interpretation.

https://www.journalofaccountancy.com/issues/2014/apr/placed-in-service-date.html

I suggest it would be aggressive to claim an in service date prior to having the car in your possession including gaming the date with invoice play. Bold choices sometimes are met with stinging rebukes.

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[Regularmache]

This decision supports your interpretation.

https://www.journalofaccountancy.com/issues/2014/apr/placed-in-service-date.html

I suggest it would be aggressive to claim an in service date prior to having the car in your possession including gaming the date with invoice play. Bold choices sometimes are met with stinging rebukes.

In the Brown case the court used his own testimony stating the aircraft required $500k of custom outfitting to meet his needs and by his own testimony he states the additional modifications were vital to his use and the court gladly used this testimony to rule the asset was not full Functional for his needs on initial delivery date of 30 Dec.

The MachE is fully functional as built, unless you have specific modifications you need, like maybe you are using for drivers ed and need additional controls for brakes, a second steering wheel, or whatever then it wouldn't be functional for your purpose right out of the factory.
I do agree their is potential for having to explain, but the interpretation does have merit and wouldn't seem deemed arbitrary either way.

Great points you brought up and certainly worthy of the discussion.

 

[agoldman]

What happens if you Lease the car to get the tax credit based on the Lease and price then, and a week later, pay it off. I have to assume this would end up costing more in the long run, and I'm not sure about the tax credit at that point.

 

[Regularmache]

What happens if you Lease the car to get the tax credit based on the Lease and price then, and a week later, pay it off. I have to assume this would end up costing more in the long run, and I'm not sure about the tax credit at that point.

A normal lease belongs to the finance company/lease issuer like a long term rental, the owner and the one getting the tax credit is the real owner in this case the leasing company. Now Ford Options is a lease hybrid, actually it's For Financing with a Balloon payment or you sell them back the car at a predetermined price, and then you are eligible for the tax credit. I'm not sure how Ford works the interest rate if you pay your entire lease/options upfront. It could include the interest for the entire 24 months and your just giving it to them in advance, which is financially a poor move, or they discount the payments from the interest. I'm not sure that would all be in your contract and finance agreement.

 

[Badger_Prof]

In the Brown case the court used his own testimony stating the aircraft required $500k of custom outfitting to meet his needs and by his own testimony he states the additional modifications were vital to his use and the court gladly used this testimony to rule the asset was not full Functional for his needs on initial delivery date of 30 Dec.

The MachE is fully functional as built, unless you have specific modifications you need, like maybe you are using for drivers ed and need additional controls for brakes, a second steering wheel, or whatever then it wouldn't be functional for your purpose right out of the factory.
I do agree their is potential for having to explain, but the interpretation does have merit and wouldn't seem deemed arbitrary either way.

Great points you brought up and certainly worthy of the discussion.

But, if the car is not in your possession, it is not "available" even if it is already fully functional.

 

[hybrid2bev]

A normal lease belongs to the finance company/lease issuer like a long term rental, the owner and the one getting the tax credit is the real owner in this case the leasing company. Now Ford Options is a lease hybrid, actually it's For Financing with a Balloon payment or you sell them back the car at a predetermined price, and then you are eligible for the tax credit. I'm not sure how Ford works the interest rate if you pay your entire lease/options upfront. It could include the interest for the entire 24 months and your just giving it to them in advance, which is financially a poor move, or they discount the payments from the interest. I'm not sure that would all be in your contract and finance agreement.

Ford Options charges interest just like traditional financing, it's a daily interest calculation, not precompute. So if you make your monthly payments on a faster schedule or pay more than your normal monthly payment you would pay less interest.

Traditional lease is different. The interest charges are precomputed so paying early or more each month results in no savings. If you wanted to save money on a lease you could do what Ford calls an Advance Payment Plan lease (APP). An APP lease you pay all of the monthly payments upfront at delivery instead of monthly. You get a discount on the lease rate by doing an APP.

 

[DBC]

What happens if you Lease the car to get the tax credit based on the Lease and price then, and a week later, pay it off. I have to assume this would end up costing more in the long run, and I'm not sure about the tax credit at that point.

Only the first owner is entitled to the credit. If you lease, the leasing company would be the first title holder and get the credit. You would be the second title holder and not get the credit.

Basically you never get the credit if you lease. You can, however, get "lease cash" which gives you full or partial credit for the credit. In this case the leasing company get the credit and then passes on the credit to you in the form of reduced payments. This doesn't apply to other programs or discounts. For example, in CA you get a rebate for buying or leasing.

Assuming similar interest rates there isn't any real difference in the cost between leasing and then buying at the end of the lease period or just buying.

 

[DBC]

I suggest it would be aggressive to claim an in service date prior to having the car in your possession including gaming the date with invoice play. Bold choices sometimes are met with stinging rebukes.

Totally agree with your analysis, but there is nothing wrong with being aggressive, especially since in this case the "stinging rebuke" would be ... nothing. Assuming there isn't an unusual situation, It's just a timing question.

And of course you could (a) not worry about it; or (b) change your tax payments for the year by increasing deduction or decreasing estimated payments to make up for it.

 

[Regularmache]

But, if the car is not in your possession, it is not "available" even if it is already fully functional.

It's in fact reserved specifically for the reservation holder and is unavailable to the dealer for retail sale. You travel to a resort and their is no rooms available, the person behind you goes to the counter and gets a room they reserved. The room is unavailable to you, but available to them as they had a reservation. I don't disagree with you but would have no trouble arguing either case.

 

[agoldman]

Only the first owner is entitled to the credit. If you lease, the leasing company would be the first title holder and get the credit. You would be the second title holder and not get the credit.

Basically you never get the credit if you lease. You can, however, get "lease cash" which gives you full or partial credit for the credit. In this case the leasing company get the credit and then passes on the credit to you in the form of reduced payments. This doesn't apply to other programs or discounts. For example, in CA you get a rebate for buying or leasing.

Assuming similar interest rates there isn't any real difference in the cost between leasing and then buying at the end of the lease period or just buying.

I guess the question is how the car is valued. I think the credit on a lease reduces the lease value of the car. So does the payoff number take that into account or not. I guess that math could go either way at the dealers finance office.

 

[GoGoGadgetMachE]

Ford Options charges interest just like traditional financing, it's a daily interest calculation, not precompute. So if you make your monthly payments on a faster schedule or pay more than your normal monthly payment you would pay less interest.

Traditional lease is different. The interest charges are precomputed so paying early or more each month results in no savings. If you wanted to save money on a lease you could do what Ford calls an Advance Payment Plan lease (APP). An APP lease you pay all of the monthly payments upfront at delivery instead of monthly. You get a discount on the lease rate by doing an APP.

wait I could be dense but is an APP equivalent to "paying all the depreciation as the lease down payment"?

 

[hybrid2bev]

wait I could be dense but is an APP equivalent to "paying all the depreciation as the lease down payment"?

I could see it that way. You're paying all upfront at a discount rather than monthly over time.

 

[DBC]

I guess the question is how the car is valued. I think the credit on a lease reduces the lease value of the car. So does the payoff number take that into account or not. I guess that math could go either way at the dealers finance office.

You can slice the salami several ways but you end up with the same amount of salami. You can have the credit reduce the MSRP: (MSRP-$7500) - Residual. You can raise the residual: MSRP - (Residual + $7500). Or you can do lease cash: (MSRP - Residual) - $7500. It's all the same.

However, option two, adding it to the residual, is the worst because it means no one, even those who would like to stay in the vehicle, will be exercising the right to buy at lease end because the buy out price will be too high.

Other than purchase price the deal -- residual, money factor -- should be the same at all dealers.

 

[GoGoGadgetMachE]

You can slice the salami several ways but you end up with the same amount of salami. You can have the credit reduce the MSRP: (MSRP-$7500) - Residual. You can raise the residual: MSRP - (Residual + $7500). Or you can do lease cash: (MSRP - Residual) - $7500. It's all the same.

However, option two, adding it to the residual, is the worst because it means no one, even those who would like to stay in the vehicle, will be exercising the right to buy at lease end because the buy out price will be too high.

Other than purchase price the deal -- residual, money factor -- should be the same at all dealers.

wait there's salami involved now? Do I get cheese as part of my First Edition package? Does my electric knife fit on the wireless charging pad? Can I store mustard in the frunk?

Damn Ford never communicating anything to us.

 

[Kamuelaflyer]

wait there's salami involved now? Do I get cheese as part of my First Edition package? Does my electric knife fit on the wireless charging pad? Can I store mustard in the frunk?

Damn Ford never communicating anything to us.

It's part of the new Koi Pond-less frunk. Since we apparently can't do that, an optional "Cuautitlan Frunk Deli" has been installed in its place. Separate slots for your Genoa, Sopressata, Hard Salami, and even room for Spanish Chorizo. There is ample space on the shelf for various condiments.

While disappointed about the loss of my Koi pond to be, I'm looking forward to a top-notch Mach-e frunk charcuterie platter at the local outrigger canoe races. Ford does indeed think of everything.

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