CompetitionPlus.com Forum  

Go Back   CompetitionPlus.com Forum > CompetitionPlus Forums > General discussion

Reply
 
Thread Tools Display Modes
  #1  
Old 01-05-2018
a21stud a21stud is offline
Senior Member
 
Join Date: Oct 2013
Posts: 1,057
Default B2B or saving tax $$.

Racemaster posted the following and Hemi said it was probably a B2B deal which got me to wondering how B2B deals work. Below is my stab at it. I'm sure someone will let me know where I'm wrong and it's cool as I want to get it right.

Originally Posted by Racemaster
That's true it will not lead to increased sales. Why Ford is involved with Tasca in FC is puzzling.


Here is my guess at how B2B's work. One of you tax/accounting guys please correct me where I’m wrong..

If Tasca pays Ford $300 million this year for cars and parts for their dealerships, Ford must pay taxes on that $300 million minus the costs of sales. If it cost Ford $270 million to produce and deliver the $300 million dollars in cars and parts, they might pay something like 35% tax on the $30 million profit. In this example that would be paying $10.5 million in taxes.

But if Ford trades Tasca $10 million dollars worth of product for Tasca to run his Funny Car with “Ford” in big letters on the sides, that reduces Ford’s tax burden to $290 million in gross sales minus the same $270 million it cost to produce and deliver the product. That makes Ford pay my guestimated 35% tax on "only" 20 million of profit or $7 million. Ford just saved $3.5 million in tax burden they were going to have to pay while getting advertising at 24 events around the country plus any TV, internet and paper publicity Tasca can generate for a net cost of $6.5 million.

Plus Ford gets to keep one of there best dealers very happy. They now have bought NHRA based marketing at a 35% discount. Tasca Ford doesn’t have to spend $10 million of their own to advertise Tasca Ford on the car, car hauler, etc.

Bob Tasca also gets to do what he wants, (drive a funny car) without having to use any personal “after tax” dollars of his own.

Is this close to right?
__________________
.
a21stud only refers to the more common 21 stud flathead motors early drag racers coveted before the Chy. Hemi and sbc came along.
Reply With Quote
  #2  
Old 01-05-2018
HEMI_guy HEMI_guy is offline
Senior Member
 
Join Date: Jan 2008
Posts: 9,853
Default

I believe anything of value that has been traded in some form is considered taxable income. A few years ago a friend was in trouble with his credit card debt and was able to negotate a deal with the CC company.... but had to pay tax on the amount they let him slide on.
Reply With Quote
  #3  
Old 01-06-2018
Yvonne* Yvonne* is online now
Super Moderator
 
Join Date: Feb 2012
Posts: 4,276
Default

Quote:
Originally Posted by HEMI_guy View Post
I believe anything of value that has been traded in some form is considered taxable income. A few years ago a friend was in trouble with his credit card debt and was able to negotate a deal with the CC company.... but had to pay tax on the amount they let him slide on.
This is also true of contest prizes. You have to pay tax on their worth. I remember hearing about a guy who won a year's worth of donuts. The tax bill was hefty if memory serves.
Reply With Quote
  #4  
Old 01-06-2018
HEMI_guy HEMI_guy is offline
Senior Member
 
Join Date: Jan 2008
Posts: 9,853
Default

Quote:
Originally Posted by Yvonne* View Post
This is also true of contest prizes. You have to pay tax on their worth. I remember hearing about a guy who won a year's worth of donuts. The tax bill was hefty if memory serves.
Game shows now do credit checks before they let you on their shows so they know winners can afford the taxes on their winnings.
Reply With Quote
  #5  
Old 01-07-2018
Yvonne* Yvonne* is online now
Super Moderator
 
Join Date: Feb 2012
Posts: 4,276
Default

Quote:
Originally Posted by HEMI_guy View Post
Game shows now do credit checks before they let you on their shows so they know winners can afford the taxes on their winnings.
I've also heard some of the families that benefit for those new homes that get built for them as a charitable endeavors end up not being able to afford the property taxes and other expenses. It makes for a great TV show but the sad thing is its not necessarily doing them a favor by giving them a luxury home they can't afford.
Reply With Quote
  #6  
Old 01-07-2018
HEMI_guy HEMI_guy is offline
Senior Member
 
Join Date: Jan 2008
Posts: 9,853
Default

Quote:
Originally Posted by Yvonne* View Post
I've also heard some of the families that benefit for those new homes that get built for them as a charitable endeavors end up not being able to afford the property taxes and other expenses. It makes for a great TV show but the sad thing is its not necessarily doing them a favor by giving them a luxury home they can't afford.
I think that's one of the reasons the show went away. In one scenario the father took a loan against the house to fund a business... then lost it all. In my area they brought the show in and built a house that was so over-valued for the neighborrhood it raised the prop. taxes on all the homes around it. Talk about pissed off neighbors! I also knew a few of the contractors on that job that told the show they intended on paying their workers to work on the project. They were told that EVERY worker on the job HAD to donate their time. LOL.. And the concrete comany that donated the concrete for the baseent used a speacil hot mix that raised the temp. of the house to 140 while everyone had to work in it! The humidty from the concrete was so high all the doors and finish trim had to be replaced twice. Thoe concrete was such a hot mix the trucks had police escorts to and from the job. An unsubstantiated rumor was that it took a week to break up and clean out dried cement out of one of the trucks. So glad I didn't get involved with that one!
Reply With Quote
  #7  
Old 01-07-2018
Yvonne* Yvonne* is online now
Super Moderator
 
Join Date: Feb 2012
Posts: 4,276
Default

Quote:
Originally Posted by HEMI_guy View Post
I think that's one of the reasons the show went away. In one scenario the father took a loan against the house to fund a business... then lost it all. In my area they brought the show in and built a house that was so over-valued for the neighborrhood it raised the prop. taxes on all the homes around it. Talk about pissed off neighbors! I also knew a few of the contractors on that job that told the show they intended on paying their workers to work on the project. They were told that EVERY worker on the job HAD to donate their time. LOL.. And the concrete comany that donated the concrete for the baseent used a speacil hot mix that raised the temp. of the house to 140 while everyone had to work in it! The humidty from the concrete was so high all the doors and finish trim had to be replaced twice. Thoe concrete was such a hot mix the trucks had police escorts to and from the job. An unsubstantiated rumor was that it took a week to break up and clean out dried cement out of one of the trucks. So glad I didn't get involved with that one!
Wow, that must've been bad! Lucky you dodged that project.

I think the main thing for A21's thread here is that the tax man is going to get his due one way or another. LOL
Reply With Quote
  #8  
Old 01-07-2018
a21stud a21stud is offline
Senior Member
 
Join Date: Oct 2013
Posts: 1,057
Default

Quote:
Originally Posted by Yvonne* View Post
Wow, that must've been bad! Lucky you dodged that project.

I think the main thing for A21's thread here is that the tax man is going to get his due one way or another. LOL
So does anyone know how the B2B works to both parties advantage? Sounds like my example wouldn't work at all...
__________________
.
a21stud only refers to the more common 21 stud flathead motors early drag racers coveted before the Chy. Hemi and sbc came along.
Reply With Quote
  #9  
Old 01-07-2018
HEMI_guy HEMI_guy is offline
Senior Member
 
Join Date: Jan 2008
Posts: 9,853
Default

Quote:
Originally Posted by a21stud View Post
So does anyone know how the B2B works to both parties advantage? Sounds like my example wouldn't work at all...
B2B's can very in a vast number of ways. One example I've been told about is DSR's deal with NAPA. Supposedly DSR threw in the F/C deal to get Schumacher battery chargers in their stores. A similar deal was supposedly made with Sears with Hagan's Die Hard car. Supposedly Schumacher makes their battery chargers.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 07:39 PM.


Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.