Leasing vs. Purchasing a Luxury Vehicle

1. Leasing vs. Purchasinga Luxury Vehicle Economic & Tax Impact of Auto Acquisitions Mercedes Benz of Long BeachMonday, June 19, 2006

2. Prior to joining the firm, Blake was a tax partner with the international accounting firm of KPMG Peat Marwick and also served as Tax Director with a Fortune 500 corporation. Blake received a master's degree in taxation from the University of Southern California and completed a bachelor's degree in business administration from California State University Long Beach. Blake’s clients include multi-national, publicly traded corporations, as well as closely held, owner-managed businesses. His industry concentration includes manufacturing and distribution, service companies, shipping and transportation, and healthcare. In addition to corporate, partnership and individual tax compliance and planning, Blake specializes in California and federal tax incentive programs - with concentration on the California Enterprise Zone credit program. In the last two years alone, HCVT has identified over $20,000,000 of EZ credits for their clients. Blake has lectured at a number of universities, including University of Southern California (MBT Program) and California State University Long Beach (Annual Tax Conference). Blake has also been a technical resource for a number of news organizations, including USA Today, Los Angeles Times, KTLA News, Orange County NewsChannel, KNX NewsRadio, and KFI Radio. Blake is a member of the Tax Division of the American Institute of Certified Public Accountants, the California Society of Certified Public Accountants, the Tax Section of the State Bar of California and a member of the Long Beach Estate and Trust Council. Blake is a member of Long Beach Rotary, the Los Angeles Harbor Association and the Long Beach Chamber of Commerce Board Member/Leadership Council Member. He has also been a charter member and Vice-Chairman of the (post-bankruptcy) Orange County Treasury Oversight Committee since 1995 and The Boeing C-17 “Red Team.” Presented by:Blake E. Christian, CPA, MBT 2

3. LEASE VS. BUY? [A] Applicable during lease measurement period. Ignores impact of costs due at lease signing, down payments and residual buy-outs. [B] Represents a modified loan amortization so that lease residual and unamortized loan amounts are equal at the end of lease term. 3

4. LEASE TERMS 4

5. PURCHASE TERMS 5

6. DEPRECIATION/LEASE INCLUSION TABLES FOR LUXURY AUTOS 6

7. 6,000 LBS. EXCEPTION 7

8. 6,000 LBS. EXCEPTION (CONTINUED) 8

9. TAX IMPLICATIONS OF BUY V. LEASE Note: All of the above rules only apply on the business-use portion of the vehicle. 9

10. EMPLOYEE BUSINESS EXPENSES 10

11. CONCLUSION CONSIDER PURCHASING IF: • You are acquiring a vehicle weighing more than 6,000 lbs. • You are acquiring a vehicle under $30,000. • You use the vehicle for less than 25% business use. • You have plenty of cash or have easy access to low-interest loans. • You are inclined to keep your vehicle for 5 years or more, or average more than 15,000 miles per year. 11

12. CONCLUSION (CONTINUED) CONSIDER LEASING IF: • You prefer luxury vehicle. • You tend to want a new vehicle every 3-4 years. • You want to minimize monthly payments. • You use the vehicle for business and want to maximize deductions (NOTE: Consider front-loading tax deductions by increasing down payment on a lease). • You don’t like the hassle of selling your old car. • You are purchasing a “unibody” car. 12

13. Questions? 13