[JohnJL]

Originally Posted by widgeon13

You probably should be asking a Canadian accountant.

Yes, I will. I wanted to hear of there were other examples I could take to him/her.

Originally Posted by MRM

Taxes will be owed in the jurisdiction where the income is earned. Trying to earn income in one jurisdiction and paying a lower tax rate in another is a time-honored and generally illegal activity commonly known as transfer pricing (which can be legal) or "calving" which is slang for illegal transfers. Be careful that you don't run the risk of one country or the other getting suspicious you're doing that. With the anti-money laundering and terrorism financing laws in place, it's hard to sneak questionable money transfers through without fully declaring them.

In the US the general rule is that you can only deduct expenses on your car investment/collection (or any other outside business) to the extent that you have taxable income from that business. Here, you can't deduct car collection investment expenses against your ordinary income or your company's ordinary income, if you own a business. When you sell the cars you would claim capital gains and deduct any maintenance or expenses from the car's appreciated value anyway, so I don't see the value to deeding the cars to a corporation or trust for tax purposes.

If your company can use the cars, even for display, you can rent the cars to your company, deduct the rent from your company's income, declare it as income to your car investment business, write down the collection's expense and depreciation to the extent that the cars do generate income, and pay tax on what's left over. But then when you sell the car all the depreciation gets recaptured and you can't deduct the ongoing expenses from your capital gains, so it's probably a wash. I'm not sure it's worth going through the effort.

I'm assuming I'd do everything in Canada, where my main residence is and where the cars are located. I'm not trying to game any tranfer pricing. I'm a Banker, I know that one is off limits!

Originally Posted by Porsche-O-Phile

One of my flight students (attorney) bought a Piper Cherokee 180 and set up an LLC to handle the management of it. I imagine the same sort if thing could be done with cars (although the airplane did bring in revenue on leaseback so it was more legit arguably having a 2-way money stream...)

This is what I'm talking about. Something like this;

1. Establish a company in which I, or my wife or kids, are the sole or controlling owners.
2. Capitalize the company with the deeds for the 6 cars plus some cash.
3. Pay myself (or defer the payment as an Account Payable until the car is sold) for work done.
4. Buy all the parts and labor to maintain/restore the cars from that cash in the company's account.
5. At the end of the year the operating loss (in a year when I didnt sell anything but incurred parts/labor charge) or gain (when I did sell a car) gets trued-up
6. Achieve an end-result where in sum I retain more $ than the current arrangement where I pay parts out of my own pocket without any deductability or capital gains offset, etc.

Originally Posted by stomachmonkey

So you are saying ABC Car company will own the cars.

ABC Cars has no income / does not generate revenue.

ABC Cars will pay John Doe for work.

Where is ABC Cars getting the money to pay John Doe?

Never mind the fact that John Doe now has income that he needs to report / pay taxes on.

Sounds like a complicated way to get yourself in trouble for no gain.

I definately dont want trouble. Some years the company would show actual or book profits when cars are sold or of I had to periodically mark the assets to a market price. The company could pay out of an initial or recurring capital injection by its owner (me.)