Question for Ken

[Mikey P]

I think I recall you saying you replace your vans every five years.

or was it ever so many miles/hours?


How many vans per year are you buying/leasing than? do you take the full 179 deduction of spread out the tax benefits over those five years?

 

[Ken Snow]

We have been keeping them 7-8 years for a few years now- due to the economy and its effect on our retail business. Every year is different in terms of section 179 deductions but certainly if it was an unusually high profit year we would take more or full advantage of the deduction.

We just took delivery of 6 Butlers in extended vans and sold all but 1 so far of the ones they are replacing. The 6 longer ones will carry more t & g equipment without having to over pack the smaller size vans. I suspect over the next 4 years we will only have extended vans for our cleaning units.

 

[Mikey P]

so most year you take the deductions for the term of the loan.


Do you lease or purchase ?

 

[Ken Snow]

We in effect are buying them through Capital Leases with 1$ buyouts that are treated as purchases for IRS purposes. I would say typically we are taking advantage of some, but not all of the 179 deductions. We are a more complicated group of businesses with a number of real estate entities as well as different business units so we would not be a good one to compare with. As example, our fleet of vehicles are purchased (1$ buyout leases) by another entity separate from our operating unit and leased to ourselves. This entity takes full advantage of section 179, but other entities do not.

 

[hogjowl]

How come nobody ever asks me these kinds of questions?

 

[Steve Toburen]

How come nobody ever asks me these kinds of questions?

He didn't ask me either but we found after 5,000-6,000 hours with expensive (and don't-give-a-darn) employees running the units it was easier and more cost efficient to swap 'em out for new. Plus the unit had obviously paid for itself many times over.

Steve

PS A careful (or cheap) motivated owner-operator can get 10,000 hours out of a good TM easy. In Alabama I've heard they'll limp along till they die.