Please sign in to post in this forum.

ForumsShop Talk

Previous Next Up to All Forums

This Question is Possibly Answered

1 "correct" answer available (5 pts) 2 "helpful" answers available (4 pts)
Post a new topic
8 Replies Last post: May 17, 2008 4:05 AM by Iwrite

100% Shareholder/employee Lease personal vehicle to S corp

Oct 9, 2009 2:56 PM

Click to view Jose263's profile Professional Jose263 7 posts since
Oct 9, 2009
President, shareholder, and only employee of S corp 2nd year in business. Did well this year. seeking tax strategy
Considering replacing current vehicle with new vehicle before end of year 12/31/2009 - mixed personal and business use but would be >50% business use. probably near 100% during remainder of 2009.
Prefer the Scorp NOT purhase/own the vehicle
Scenario:
If I personally purchase new SUV >6k lbs and lease it to my S corp. Does this qualify for the sec 179 deduction on personal 1040? If so, what % for 179?

Use of the vehicle would be primarily in the S corp business >50%. I think would have to report Personal use miles value as income on W-2?
how would lease payment from S corp to shareholder be handled - thinking of leasing for the monthly payment amount - i.e Scorp pays car note

Welcome advice/comments
Tags: Report as inappropriate
Click to view bm911tax's profile Mogul bm911tax 64 posts since
Jun 30, 2009
1. Re: 100% Shareholder/employee Lease personal vehicle to S corp Oct 12, 2009 9:16 AM
in response to: Jose263

In order for employees to get reimbursed by the S Corp for ordinary and necessary business expenses, the S Corp needs to adapt an Accountable Employee Reimbursement Plan. See link for more details http://www.irs.gov/irb/2006-46_IRB/ar08.html


Be careful with the mileage (many people abuse it). Without proper record keeping for auto business use, IRS will disallow these type arrangements.

Yes, you can use appropriate % of 179 for auto deduction if you use it over 50% for business. But in your proposed scenario, (the vehicle will be purchased by individual) and S Corp will only be reimbursing you for business use, so no 179 will be available for S Corp.

Report as inappropriate
Click to view Jose263's profile Professional Jose263 7 posts since
Oct 9, 2009
2. Re: 100% Shareholder/employee Lease personal vehicle to S corp Oct 14, 2009 5:30 PM
in response to: bm911tax
BM - thanks for response

"Yes, you can use appropriate % of 179 for auto deduction if you use it over 50% for business. But in your proposed scenario, (the vehicle will be purchased by individual) and S Corp will only be reimbursing you for business use, so no 179 will be available for S Corp".

In proposed scenario - can individual owner (also S corp employee) take 179 if leasing the vehicle to S Corp?

Perhaps the best way to ask my question is:
Single shareholder/owner S Corp also single employee - a vehicle is needed to be used in the business >50% for business purposes.
What scenario(s) would allow 179 deducion for purchasing new vehicle and placing in service in 2009?
Report as inappropriate
Click to view bm911tax's profile Mogul bm911tax 64 posts since
Jun 30, 2009
3. Re: 100% Shareholder/employee Lease personal vehicle to S corp Oct 15, 2009 10:39 AM
in response to: Jose263
The only way 179 would work is if the S Corp owns the asset (car). So the title has to be on S Corp name. If employee will use personal car, only mileage driven for business use will be reimbursed by S Corp.
Report as inappropriate

More Like This

Legend

  • Open Question
  • Answered Question
  • New content since your last visit
  • Updated content since your last visit
  • Content you have read