25,000 Miles per year at $0.60 per Mile is $15,000 in your pocket (tax free).

Would it really be 25,000 Miles per year and for how many years? Assuming yes, then figure out if the projected $15,000 covers your liability.

By my math $15,000 covers things nicely even with a gas hog like the 300E. You own it already and it essentially has zero resell value. Why not maintain it to the hilt and drive it into the ground. The big variable is the maintenance investment needed to make it 100%, mission critical reliable.

Assuming 25,000 Miles per year:

Gas - Figure 20 MPG so 1,250 Gallons at $3.00 is ~$3,750
Insurance, registration, inspection ~$1,250

The property itself has almost no value now, so take that out of the equation.

Now decide if you can keep it on the road at 100% reliability for $10,000 per year. Is there enough wiggle room/profit to justify the risk?

To me, this is model where otherwise valueless Mercedes make the MOST sense.

In your situation, I would take the company car (I hate minivans too), and I'd upgrade my MB to something even nicer with the money I saved.

With your estimate of 80,000 miles in 3 years, you're looking at $48,000.

i would

1) buy a diesel 300SD 1980-1985
2) fix it up to burn WVO so that you can puill up to a restuarant and fill er up for free.
3) pocket the .60 per miles

my 2¢

Or take the same model and lease a previously owned but newer car. ~$800 per month to cover the leasing costs. Only potential problem is if you change jobs and are still on the hook for the lease. Also, is it really 25,000 Miles per year or is that a wild guess? Is the mileage reimbursement process onerous?

I'd drive the Benz all day long for $.60/ mile. My wife in a former job had both situations - mileage and company car. She was allowed to drive the company car anywhere - weekends, errands, etc. Will you be allowed to put on personal miles? But the company included a "imputed income" amount on her W-2 form, so it technically was a taxable benefit. The personal car mileage was a reimbursement, so not taxible. You are paying insurance and the car still depreciates sitting in the driveway. May as well enjoy it. My $.02.

If you drive your own car and take the reimbursement, my advice for you is not to buy another car you don't need. Buying another car usually means extra insurance and taxes. Just use the good car you have and extract as much value from driving it as possible.

Ken300D

Thanks, everyone...
 

I appreciated reading your experiences and advice. A couple of things to note:
1) The image of the Mercedes can be problematic as many people equate Mercedes with Cadillac or Lincoln (ie luxury not durability and safety) ...and it is tough to change this perception.
2) My job is project management and I would typically spend a lot of time driving to work sites (hence the long mileage and then a short distance on a gravel or industrial road). So I don't meet customers but I do meet other staff.
3) Having a company vehicle means having 3 vehicles unless I sell the Mercedes. Still have 3 kids to haul and a family of five has few options better than minivans for a single vehicle.
4) My wife is totally in favour of the company vehicle because of the removal of the risk of major repair expenses and other ownership hassles.
5) Maybe I could learn to like the minivan (more likely that there will be snowball fights in hell before that happens).

I'm tending towards the minivan because of the family needs. I need a mid-life crisis!

Cheers and thanks!
Paul

Take the company car
 

Some of these opinions are all over the place and dont compute. Take the company vehicle, they pay for the fuel, the maintenace, the insurance. Your car is way too old to pile on 25,000 miles per year. There has to be a reason they are giving you a van, are you hauling things, if you are broken into on your personal car is it covered? If you tell them it is for business your policy will jump. There are questions, how will they treat personal mileage (an easy fudge) I had a 25car fleet they were replaced every 4 years and or 65,0000. Our people were not re-embursed from the mileage to the first sales call (IRS) issue, but they figured out if they went to their post office box for company "mail" all mileage is buisinees and they padded the logs. We finally gave up let them drive the cars, reasonably, and re-emburse us for their personal mileage. (IRS)
You will find keeping records, and using your car as a buisiness tool is envolved, your customers will not be impressed by the MB vehicle, but rather by your skills and common sense. Your .60 cents a mile is reoprted to the (IRS) If you are really serious, lease a vehicle, and write off the lease payments agaist you car allowance, otherwise you could be taxed if the company paid you more than you can justify items as operating expense. If you had it washed, company pays, if you do it does not apply.
I had a $100 million, operation we offered a 4 year opt out, (for ego people who wanted Cadillacs rather than Taurus)) and they all came back as their leases came up...whining!

I will stick to my story, because I have been around this block many times. ;)

Yeah but it's a ford minivan.
 

:D :D :D :D :D :D :D Take the 60 cents and drive the 300!

Payment for travel expenses, including mileage reimbursement, is NOT reported to the IRS as your personal income.

Ken300D

At that mileage rate, you can afford any car
 

so why not get a new one (buy or lease) that you like? It will be under warranty, so that takes care of the repair issue your wife mentioned, you can get something more suitable for project terrain and kids, and it will have airbags etc. that your museum piece doesn't have.

Actually, it's not. You are being reembersed for an expense that you incurred on behalf of the business... so it's not taxable. At least not at the IRS milage rate -- which is about 40 cents per mile. My guess is that the 20 cents per mile difference in the two milage rates IS taxable -- you should check with your accountant on that.

Jeff Pierce

I hope you are speaking as a tax expert, The payment shows on your W-2, because the company treats it as an expense, you then itemize your business expense form (gas, and other expenses, like a lease, or the purchase and depreciation of the vehicle) which subtracts.

As Peter has stated above you will be paying taxes on a portion of your $0.60 per mile, everyone that is viewing the $0.60 per mile as untaxed income would be unhappy when they got their W2.

A few key questions can be answered by the following and the link to the IRS publication.

Hope this helps.

Is my employer supposed to include mileage reimbursement as a part of my gross income on my Form W-2, and do I include it on my return as wages, tips, and salaries?

That depends on whether you were reimbursed under an accountable plan or under a non accountable plan. Generally, an employer will have an accountable plan if it pays business expenses that would otherwise be deductible by the employee, requires the employee to substantiate the expense, and does not permit the employee to keep any reimbursements that exceed expenses. If the employer does not use an accountable plan, mileage reimbursement would be included in your wages on Form W-2. For more information on reimbursements and accountable plans, refer to http://www.irs.gov/pub/irs-pdf/p463.pdf Chapter 6 of Publication 463 (PDF), Travel, Entertainment, Gift, and Car Expenses.

If your mileage reimbursement is included in box 1 on Form W-2, you need to enter that amount on the "wages, salaries, and tips" line of your tax return. If you itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions, you may deduct the business transportation expense as an employee business expense, subject to the 2% limitation of adjusted gross income. You may usually deduct either your actual business automobile expenses or use the standard mileage rate. For more information on when you may use the standard mileage rate, refer to http://www.irs.gov/pub/irs-pdf/p463.pdf Chapter 4 of Publication 463 (PDF), Travel, Entertainment, Gift, and Car Expenses.