I was brainstorming a not-documented way of possibly deducting a car and associated costs as a business expense. But not because of normal driving. So I would like some insight into it.

I would like to use a car to house a small computer that is doing computations for a potentially profitable business venture.

Do the costs of the car now magically become tax deductible? Computers have only recently become small enough and low powered enough to consider something like this, and the car is merely property like any other property.

  • Definitely not.. For that matter you may have to work a bit harder than you expect to show that the computer is used 100% for business. Not to mention that you'd be absolutely begging for an audit. – keshlam Feb 20 '16 at 21:34
  • @keshlam the point is to do things that would pass an audit, not be scared of them. The computer would be used 100% for business, what is hard about that? Get a $25 raspberry pi taped to the ceiling of the trunk running it's calculations and periodically broadcasting via long range communications. So now that's out the way, how does that change your answer? – CQM Feb 20 '16 at 21:53
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    Why does it need to be in the car? If it could still do its job on a server rack connected to the Internet, the car isn't really necessary. – IllusiveBrian Feb 20 '16 at 22:27
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    Basically, if you can use the word "magically", you can assume it's been tried and ruled against. And while an audit is nothing to be afraid of if you aren't pushing the boundaries, this is one you can't hope they won't notice or will give you the benefit of the doubt on. If it violates the common sense test, you can bet dollars to donuts you can't get away with it. – keshlam Feb 20 '16 at 23:02
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    Aside from anything else, what do you hope to gain by doing this? If you buy a car for $X, use it for nothing but this scheme, and then deduct the $X, you haven't really saved any money; you bought the car tax-free but you're not getting any use out of it other than to run this computer setup that you only created as an excuse to the buy the car in the first place. Even if you were able to deduct the car as an expense in this situation, you can't start driving it around for personal reasons, because then you definitely can't deduct (all of) if. – BrenBarn Feb 21 '16 at 18:34

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. (IRS, Deducting Business Expenses)

It seems to me you'd have a hard time convincing an auditor that this is the case. Since business don't commonly own cars for the sole purpose of housing $25 computers, you'd have trouble with the "ordinary" test. And since there are lots of other ways to house a computer other than a car, "necessary" seems problematic also.

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    The metal frame will not "amplify signal", nor (again) would you need a car if it did. You might be able to justify a directional antenna if you can explain why you can't relocate the computer, but a cantenna can be built for $10. Ditto the battery; even if you had a reason to run it off a car battery, that at most makes the battery a business expense and that only to the extent that the battery is used for nothing else. Really, trying to guess your way to where you wish a deduction existed just doesn't work. Try starting from the tax codes and working outward, if you must. – keshlam Feb 21 '16 at 2:36
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    Aversion because I don't think you stand a snowball's chance in hell of convincing them that this will be the sole use if the vehicle, which is what you're trying to claim. If you think you can get away with it, I'm not going to try to stop you. But you asked if it would work, and you've gotten an answer. – keshlam Feb 21 '16 at 3:36
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    A non functioning junker case would do everything you need for $200. You would not convince the taxman to let you deduct a $10000 car and expenses to run it. – DJClayworth Feb 21 '16 at 4:47
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    I'd think the only possible way you could do this is if you actually developed an income-producing product based on the car/computer combo. – jamesqf Feb 21 '16 at 6:02
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    If it has mixed uses, you can only deduct the percentage used by the business. If allowed at all, that would be negligable in your case. Again, read the tax code rather than guessing; there are clean analogies for this case wrt personal use of business vehicles, what can be legitimately claimed as a home office (probably closer), and the like. There is no magic here; there are clear rules. The century has nothing to do with it. – keshlam Feb 21 '16 at 19:09

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