IR-2009-30, March 30, 2009
WASHINGTON — The Internal Revenue Service announced today that taxpayers who buy a new passenger vehicle this year may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns next year.
“For those thinking about buying a new car this year, this deduction may give them a little more drive to make their purchase this year,” said IRS Commissioner Doug Shulman. “This deduction enables taxpayers to buy now and get cash back later on their tax returns.”
The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
IRS also alerted taxpayers that the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010, to qualify for the deduction.
The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.
For more information go to: www.irs.gov/newsroom/article/0,,id=205863,00.html
Tuesday, March 31, 2009
Tuesday, March 3, 2009
Ford Benefits as GM, Chrysler Stumble
FEBRUARY 20, 2009
By MATTHEW DOLAN
(See Correction & Amplification below.)
Ford Motor Co., which hasn't taken a dime of government bailout loans, is benefiting from the troubles of its two cross-town competitors in Detroit, General Motors Corp. and Chrysler LLC.
GM and Chrysler are required to seek cost concessions from the United Auto Workers union under the terms of their federal loans. That allowed Ford to open parallel talks with the UAW, which has a history of working out the same conditions at each company.
This week, Ford and the UAW reached an agreement to cut pay for laid-off workers, ease work rules and eliminate wage increases tied to the cost of living -- two days before GM and Chrysler reached the same deal.
At the same time, while GM and Chrysler have been hit with a steady stream of negative news -- including growing concern they may need to file for bankruptcy protection -- Ford has been having more success at luring away its competitors' customers. Ford's share of the U.S. retail market rose in each of the past four months, while GM's and Chrysler's fell, Ford said.
In January, 45% of Ford buyers turned in cars or trucks of other manufacturers, up from 38% in August, according to Edmunds.com, an auto-shopping Web site. Meantime, the "conquest rate" for GM's Chevrolet was 43% last month, down from 49% in August, and for the Chrysler brand, the conquest rate was 60% last month, down from 67% in August, according to Edmunds. "That's a sign that there is something definitely going on for Ford," said Jesse Toprak, an analyst at Edmunds Inc.
For some domestic-car buyers, the bankruptcy talk has been enough to cause them to defect to Ford. John Grassi of Warren, Mich., recently turned in his leased Dodge Grand Caravan minivan and replaced it with a Ford Fusion.
"The future of GM and Chrysler certainly played a part in my decision," said Mr. Grassi, 50 years old, who works for Warren's parks and recreation department. "Ford seems to be the most sound in terms of staying solvent. I mean, you look at your warranty and you want that warranty to be good." Still, Ford has many challenges.
Edmunds's Mr. Toprak said the company is "weighed down" by the perception of many consumers that it is in the same boat as GM and Chrysler. All auto makers are suffering from the recession and credit crunch, which have sent sales plummeting. In January, Ford's sales were down 40%. And the company continues to post huge losses, including $5.5 billion in the fourth quarter, which are eating up its cash.
Ford isn't assuming its trend of recent market share increases will continue. "This market provides limited opportunities.
You can't will yourself to higher sales," said Ford sales analyst George Pipas.
Ford has told the federal government it doesn't need loans for now, mainly because it raised about $23.5 billion in 2006 by mortgaging almost all of its plants and assets. The company said it had $13.4 billion in cash as of Dec. 31. Its credit lines dried up in January.
So far, GM has won $13.4 billion in loans from the Treasury Department, and this week asked for as much as $16.6 billion more in a revitalization plan it was required to give the government. Chrysler has received $4 billion and has asked for $5 billion more.
The UAW concessions reached this week could save the auto makers hundreds of millions of dollars a year -- for Ford, a windfall from its rivals' struggles. The union agreement "was styled in such a way to benefit all three companies," UAW President Ron Gettelfinger said in an interview Thursday with Detroit radio station WWJ.
The terms of the government loans also require GM, Chrysler and the union to work out a way for the companies to put less cash and more stock into trust funds to cover the cost of health care for retired union workers. That has opened the door for similar talks at Ford, although no agreements have been reached yet.
The terms of the government loans also require GM, Chrysler and the union to work out a way for the companies to put less cash and more stock into trust funds to cover the cost of health care for retired union workers. That has opened the door for similar talks at Ford, although no agreements have been reached yet. Ford also is believed to be seeking concessions from its bondholders and dealers, also required by the loans given to GM and Chrysler.
Ford has been less forthcoming about the state of these negotiations. But Ford Chief Executive Alan Mulally said during an earnings call last month that "I really believe from the ongoing conversations that we are having with all the stakeholders and the U.S. government that as we go through this and we continue to take the actions that we need to take that we will not be disadvantaged."
Meanwhile, Ford seems to have made headway with customers as both GM and Chrysler nearly ran out of money over the past few months. In Centerline, Mich., Bob Thibodeau said he's noticed more owners of other makes shopping at his Ford dealership. "We have certainly seen a lot more cross-shopping in recent months like we've never seen before," he said.
Ford also may be seeing more customer traffic because it just launched a redesigned version of its F-150 pickup truck, the top-selling vehicle in the country, and its finance arm is healthier than the lenders GM and Chrysler work with, GMAC LLC and Chrysler Financial. Write to Matthew Dolan at matthew.dolan@wsj.com Corrections & Amplifications
Ford Motor Co. had $13.4 billion in cash as of Dec. 31, 2008, but still had $10.1 billion in lines of credit. A previous version of this article implied that its last credit lines had also been drawn down by that time, a move that did not happen until January.
By MATTHEW DOLAN
(See Correction & Amplification below.)
Ford Motor Co., which hasn't taken a dime of government bailout loans, is benefiting from the troubles of its two cross-town competitors in Detroit, General Motors Corp. and Chrysler LLC.
GM and Chrysler are required to seek cost concessions from the United Auto Workers union under the terms of their federal loans. That allowed Ford to open parallel talks with the UAW, which has a history of working out the same conditions at each company.
This week, Ford and the UAW reached an agreement to cut pay for laid-off workers, ease work rules and eliminate wage increases tied to the cost of living -- two days before GM and Chrysler reached the same deal.
At the same time, while GM and Chrysler have been hit with a steady stream of negative news -- including growing concern they may need to file for bankruptcy protection -- Ford has been having more success at luring away its competitors' customers. Ford's share of the U.S. retail market rose in each of the past four months, while GM's and Chrysler's fell, Ford said.
In January, 45% of Ford buyers turned in cars or trucks of other manufacturers, up from 38% in August, according to Edmunds.com, an auto-shopping Web site. Meantime, the "conquest rate" for GM's Chevrolet was 43% last month, down from 49% in August, and for the Chrysler brand, the conquest rate was 60% last month, down from 67% in August, according to Edmunds. "That's a sign that there is something definitely going on for Ford," said Jesse Toprak, an analyst at Edmunds Inc.
For some domestic-car buyers, the bankruptcy talk has been enough to cause them to defect to Ford. John Grassi of Warren, Mich., recently turned in his leased Dodge Grand Caravan minivan and replaced it with a Ford Fusion.
"The future of GM and Chrysler certainly played a part in my decision," said Mr. Grassi, 50 years old, who works for Warren's parks and recreation department. "Ford seems to be the most sound in terms of staying solvent. I mean, you look at your warranty and you want that warranty to be good." Still, Ford has many challenges.
Edmunds's Mr. Toprak said the company is "weighed down" by the perception of many consumers that it is in the same boat as GM and Chrysler. All auto makers are suffering from the recession and credit crunch, which have sent sales plummeting. In January, Ford's sales were down 40%. And the company continues to post huge losses, including $5.5 billion in the fourth quarter, which are eating up its cash.
Ford isn't assuming its trend of recent market share increases will continue. "This market provides limited opportunities.
You can't will yourself to higher sales," said Ford sales analyst George Pipas.
Ford has told the federal government it doesn't need loans for now, mainly because it raised about $23.5 billion in 2006 by mortgaging almost all of its plants and assets. The company said it had $13.4 billion in cash as of Dec. 31. Its credit lines dried up in January.
So far, GM has won $13.4 billion in loans from the Treasury Department, and this week asked for as much as $16.6 billion more in a revitalization plan it was required to give the government. Chrysler has received $4 billion and has asked for $5 billion more.
The UAW concessions reached this week could save the auto makers hundreds of millions of dollars a year -- for Ford, a windfall from its rivals' struggles. The union agreement "was styled in such a way to benefit all three companies," UAW President Ron Gettelfinger said in an interview Thursday with Detroit radio station WWJ.
The terms of the government loans also require GM, Chrysler and the union to work out a way for the companies to put less cash and more stock into trust funds to cover the cost of health care for retired union workers. That has opened the door for similar talks at Ford, although no agreements have been reached yet.
The terms of the government loans also require GM, Chrysler and the union to work out a way for the companies to put less cash and more stock into trust funds to cover the cost of health care for retired union workers. That has opened the door for similar talks at Ford, although no agreements have been reached yet. Ford also is believed to be seeking concessions from its bondholders and dealers, also required by the loans given to GM and Chrysler.
Ford has been less forthcoming about the state of these negotiations. But Ford Chief Executive Alan Mulally said during an earnings call last month that "I really believe from the ongoing conversations that we are having with all the stakeholders and the U.S. government that as we go through this and we continue to take the actions that we need to take that we will not be disadvantaged."
Meanwhile, Ford seems to have made headway with customers as both GM and Chrysler nearly ran out of money over the past few months. In Centerline, Mich., Bob Thibodeau said he's noticed more owners of other makes shopping at his Ford dealership. "We have certainly seen a lot more cross-shopping in recent months like we've never seen before," he said.
Ford also may be seeing more customer traffic because it just launched a redesigned version of its F-150 pickup truck, the top-selling vehicle in the country, and its finance arm is healthier than the lenders GM and Chrysler work with, GMAC LLC and Chrysler Financial. Write to Matthew Dolan at matthew.dolan@wsj.com Corrections & Amplifications
Ford Motor Co. had $13.4 billion in cash as of Dec. 31, 2008, but still had $10.1 billion in lines of credit. A previous version of this article implied that its last credit lines had also been drawn down by that time, a move that did not happen until January.
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